|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
48-1090909
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
|
|
3111 Camino Del Rio North, Suite 103
San Diego, California
|
92108
|
(Address of principal executive offices)
|
(Zip code)
|
Class
|
|
Outstanding at October 27, 2017
|
Common Stock, $0.01 par value
|
|
25,745,485 shares
|
|
Page
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
188,246
|
|
|
$
|
149,765
|
|
Investment in receivable portfolios, net
|
2,728,811
|
|
|
2,382,809
|
|
||
Property and equipment, net
|
71,213
|
|
|
72,257
|
|
||
Deferred court costs, net
|
77,361
|
|
|
65,187
|
|
||
Other assets
|
254,993
|
|
|
215,447
|
|
||
Goodwill
|
853,162
|
|
|
785,032
|
|
||
Total assets
|
$
|
4,173,786
|
|
|
$
|
3,670,497
|
|
Liabilities and equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
269,927
|
|
|
$
|
234,398
|
|
Debt
|
3,148,497
|
|
|
2,805,983
|
|
||
Other liabilities
|
32,207
|
|
|
29,601
|
|
||
Total liabilities
|
3,450,631
|
|
|
3,069,982
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
160,663
|
|
|
45,755
|
|
||
Redeemable equity component of convertible senior notes
|
77
|
|
|
2,995
|
|
||
Equity:
|
|
|
|
||||
Convertible preferred stock, $.01 par value, 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, 50,000 shares authorized, 25,745 shares and 25,593 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
257
|
|
|
256
|
|
||
Additional paid-in capital
|
43,006
|
|
|
103,392
|
|
||
Accumulated earnings
|
602,199
|
|
|
560,567
|
|
||
Accumulated other comprehensive loss
|
(74,153
|
)
|
|
(104,911
|
)
|
||
Total Encore Capital Group, Inc. stockholders’ equity
|
571,309
|
|
|
559,304
|
|
||
Noncontrolling interest
|
(8,894
|
)
|
|
(7,539
|
)
|
||
Total equity
|
562,415
|
|
|
551,765
|
|
||
Total liabilities, redeemable equity and equity
|
$
|
4,173,786
|
|
|
$
|
3,670,497
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
77,757
|
|
|
$
|
55,823
|
|
Investment in receivable portfolios, net
|
1,277,384
|
|
|
972,841
|
|
||
Property and equipment, net
|
20,193
|
|
|
19,284
|
|
||
Deferred court costs, net
|
26,089
|
|
|
22,760
|
|
||
Other assets
|
93,815
|
|
|
79,767
|
|
||
Goodwill
|
648,574
|
|
|
584,868
|
|
||
Liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
129,010
|
|
|
$
|
99,689
|
|
Debt
|
1,846,308
|
|
|
1,514,799
|
|
||
Other liabilities
|
2,951
|
|
|
1,921
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Revenue from receivable portfolios, net
|
$
|
283,588
|
|
|
$
|
159,534
|
|
|
$
|
807,794
|
|
|
$
|
697,080
|
|
Other revenues
|
23,111
|
|
|
19,881
|
|
|
61,763
|
|
|
60,794
|
|
||||
Total revenues
|
306,699
|
|
|
179,415
|
|
|
869,557
|
|
|
757,874
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Salaries and employee benefits
|
77,232
|
|
|
67,783
|
|
|
221,296
|
|
|
212,924
|
|
||||
Cost of legal collections
|
48,094
|
|
|
56,932
|
|
|
149,460
|
|
|
158,047
|
|
||||
Other operating expenses
|
25,859
|
|
|
24,131
|
|
|
76,249
|
|
|
75,420
|
|
||||
Collection agency commissions
|
10,622
|
|
|
8,848
|
|
|
33,678
|
|
|
28,242
|
|
||||
General and administrative expenses
|
32,500
|
|
|
34,871
|
|
|
102,750
|
|
|
103,044
|
|
||||
Depreciation and amortization
|
8,522
|
|
|
8,032
|
|
|
25,819
|
|
|
26,128
|
|
||||
Total operating expenses
|
202,829
|
|
|
200,597
|
|
|
609,252
|
|
|
603,805
|
|
||||
Income (loss) from operations
|
103,870
|
|
|
(21,182
|
)
|
|
260,305
|
|
|
154,069
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(52,755
|
)
|
|
(48,632
|
)
|
|
(152,469
|
)
|
|
(149,920
|
)
|
||||
Other income
|
8,873
|
|
|
4,100
|
|
|
12,004
|
|
|
14,358
|
|
||||
Total other expense
|
(43,882
|
)
|
|
(44,532
|
)
|
|
(140,465
|
)
|
|
(135,562
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
59,988
|
|
|
(65,714
|
)
|
|
119,840
|
|
|
18,507
|
|
||||
(Provision) benefit for income taxes
|
(17,844
|
)
|
|
13,768
|
|
|
(43,442
|
)
|
|
(9,831
|
)
|
||||
Income (loss) from continuing operations
|
42,144
|
|
|
(51,946
|
)
|
|
76,398
|
|
|
8,676
|
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(199
|
)
|
|
(3,182
|
)
|
||||
Net income (loss)
|
42,144
|
|
|
(51,946
|
)
|
|
76,199
|
|
|
5,494
|
|
||||
Net (income) loss attributable to noncontrolling interest
|
(13,950
|
)
|
|
50,422
|
|
|
(5,652
|
)
|
|
48,264
|
|
||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
28,194
|
|
|
$
|
(1,524
|
)
|
|
$
|
70,547
|
|
|
$
|
53,758
|
|
Amounts attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
28,194
|
|
|
$
|
(1,524
|
)
|
|
$
|
70,746
|
|
|
$
|
56,940
|
|
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(199
|
)
|
|
(3,182
|
)
|
||||
Net income (loss)
|
$
|
28,194
|
|
|
$
|
(1,524
|
)
|
|
$
|
70,547
|
|
|
$
|
53,758
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.08
|
|
|
$
|
(0.06
|
)
|
|
$
|
2.73
|
|
|
$
|
2.22
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.13
|
)
|
Net basic earnings (loss) per share
|
$
|
1.08
|
|
|
$
|
(0.06
|
)
|
|
$
|
2.72
|
|
|
$
|
2.09
|
|
Diluted earnings (loss) per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.05
|
|
|
$
|
(0.06
|
)
|
|
$
|
2.68
|
|
|
$
|
2.20
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
Net diluted earnings (loss) per share
|
$
|
1.05
|
|
|
$
|
(0.06
|
)
|
|
$
|
2.67
|
|
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
26,011
|
|
|
25,777
|
|
|
25,957
|
|
|
25,690
|
|
||||
Diluted
|
26,736
|
|
|
25,777
|
|
|
26,406
|
|
|
25,885
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
42,144
|
|
|
$
|
(51,946
|
)
|
|
$
|
76,199
|
|
|
$
|
5,494
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gains/losses on derivative instruments:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on derivative instruments
|
(264
|
)
|
|
983
|
|
|
1,170
|
|
|
487
|
|
||||
Income tax effect
|
103
|
|
|
(384
|
)
|
|
(409
|
)
|
|
(190
|
)
|
||||
Unrealized (loss) gain on derivative instruments, net of tax
|
(161
|
)
|
|
599
|
|
|
761
|
|
|
297
|
|
||||
Change in foreign currency translation:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on foreign currency translation
|
9,712
|
|
|
(11,341
|
)
|
|
32,000
|
|
|
(48,028
|
)
|
||||
Income tax effect
|
—
|
|
|
73
|
|
|
—
|
|
|
1,426
|
|
||||
Unrealized gain (loss) on foreign currency translation, net of tax
|
9,712
|
|
|
(11,268
|
)
|
|
32,000
|
|
|
(46,602
|
)
|
||||
Other comprehensive income (loss), net of tax
|
9,551
|
|
|
(10,669
|
)
|
|
32,761
|
|
|
(46,305
|
)
|
||||
Comprehensive income (loss)
|
51,695
|
|
|
(62,615
|
)
|
|
108,960
|
|
|
(40,811
|
)
|
||||
Comprehensive (income) loss attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Net (income) loss
|
(13,950
|
)
|
|
50,422
|
|
|
(5,652
|
)
|
|
48,264
|
|
||||
Unrealized (gain) loss on foreign currency translation
|
(594
|
)
|
|
(115
|
)
|
|
(2,003
|
)
|
|
807
|
|
||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(14,544
|
)
|
|
50,307
|
|
|
(7,655
|
)
|
|
49,071
|
|
||||
Comprehensive income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
37,151
|
|
|
$
|
(12,308
|
)
|
|
$
|
101,305
|
|
|
$
|
8,260
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
76,199
|
|
|
$
|
5,494
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss from discontinued operations, net of income taxes
|
199
|
|
|
3,182
|
|
||
Depreciation and amortization
|
25,819
|
|
|
26,128
|
|
||
Other non-cash expense, net
|
25,098
|
|
|
28,557
|
|
||
Stock-based compensation expense
|
7,041
|
|
|
9,502
|
|
||
Gain on derivative instruments, net
|
(2,714
|
)
|
|
(10,885
|
)
|
||
Deferred income taxes
|
(5,396
|
)
|
|
(46,524
|
)
|
||
(Reversal of) provision for allowances on receivable portfolios, net
|
(30,525
|
)
|
|
86,777
|
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Deferred court costs and other assets
|
(20,094
|
)
|
|
7,572
|
|
||
Prepaid income tax and income taxes payable
|
15,565
|
|
|
(2,485
|
)
|
||
Accounts payable, accrued liabilities and other liabilities
|
(9,501
|
)
|
|
(24,146
|
)
|
||
Net cash provided by operating activities from continuing operations
|
81,691
|
|
|
83,172
|
|
||
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
2,096
|
|
||
Net cash provided by operating activities
|
81,691
|
|
|
85,268
|
|
||
Investing activities:
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
(5,623
|
)
|
|
(675
|
)
|
||
Proceeds from divestiture of business, net of cash divested
|
—
|
|
|
106,041
|
|
||
Purchases of receivable portfolios, net of put-backs
|
(739,478
|
)
|
|
(712,706
|
)
|
||
Collections applied to investment in receivable portfolios, net
|
549,544
|
|
|
507,552
|
|
||
Purchases of property and equipment
|
(20,518
|
)
|
|
(16,548
|
)
|
||
Proceeds from derivative instruments, net
|
6,140
|
|
|
10,038
|
|
||
Other, net
|
2,155
|
|
|
—
|
|
||
Net cash used in investing activities from continuing operations
|
(207,780
|
)
|
|
(106,298
|
)
|
||
Net cash provided by investing activities from discontinued operations
|
—
|
|
|
14,685
|
|
||
Net cash used in investing activities
|
(207,780
|
)
|
|
(91,613
|
)
|
||
Financing activities:
|
|
|
|
||||
Payment of loan costs
|
(19,910
|
)
|
|
(3,750
|
)
|
||
Proceeds from credit facilities
|
928,141
|
|
|
455,786
|
|
||
Repayment of credit facilities
|
(972,453
|
)
|
|
(443,968
|
)
|
||
Proceeds from senior secured notes
|
325,000
|
|
|
—
|
|
||
Repayment of senior secured notes
|
(203,212
|
)
|
|
(14,343
|
)
|
||
Proceeds from issuance of convertible senior notes
|
150,000
|
|
|
—
|
|
||
Repayment of convertible senior notes
|
(60,406
|
)
|
|
—
|
|
||
Proceeds from convertible hedge instruments
|
5,580
|
|
|
—
|
|
||
Taxes paid related to net share settlement of equity awards
|
(2,538
|
)
|
|
(4,113
|
)
|
||
Proceeds from other debt
|
8,318
|
|
|
35,080
|
|
||
Other, net
|
(3,211
|
)
|
|
(11,005
|
)
|
||
Net cash provided by financing activities
|
155,309
|
|
|
13,687
|
|
||
Net increase in cash and cash equivalents
|
29,220
|
|
|
7,342
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
9,261
|
|
|
(3,263
|
)
|
||
Cash and cash equivalents, beginning of period
|
149,765
|
|
|
153,593
|
|
||
Cash and cash equivalents, end of period
|
$
|
188,246
|
|
|
$
|
157,672
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,950
|
|
Salaries and employee benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,860
|
)
|
||||
Other operating expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,473
|
)
|
||||
General and administrative expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,551
|
)
|
||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
(127
|
)
|
||||
Loss from discontinued operations, before income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,061
|
)
|
||||
Loss on sale of discontinued operations, before income taxes
|
—
|
|
|
—
|
|
|
(322
|
)
|
|
(3,000
|
)
|
||||
Total loss on discontinued operations, before income taxes
|
—
|
|
|
—
|
|
|
(322
|
)
|
|
(4,061
|
)
|
||||
Income tax benefit
|
—
|
|
|
—
|
|
|
123
|
|
|
879
|
|
||||
Total loss from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(199
|
)
|
|
$
|
(3,182
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted average common shares outstanding—basic
|
26,011
|
|
|
25,777
|
|
|
25,957
|
|
|
25,690
|
|
Dilutive effect of stock-based awards
|
271
|
|
|
—
|
|
|
214
|
|
|
195
|
|
Dilutive effect of convertible senior notes
|
454
|
|
|
—
|
|
|
235
|
|
|
—
|
|
Weighted average common shares outstanding—diluted
|
26,736
|
|
|
25,777
|
|
|
26,406
|
|
|
25,885
|
|
•
|
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
•
|
Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.
|
|
Fair Value Measurements as of
September 30, 2017 |
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
2,097
|
|
|
$
|
—
|
|
|
$
|
2,097
|
|
Interest rate cap contracts
|
—
|
|
|
2,724
|
|
|
—
|
|
|
2,724
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
—
|
|
|
(2,248
|
)
|
|
—
|
|
|
(2,248
|
)
|
||||
Interest rate swap agreements
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||
Contingent consideration
|
—
|
|
|
—
|
|
|
(10,382
|
)
|
|
(10,382
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(160,663
|
)
|
|
(160,663
|
)
|
|
Fair Value Measurements as of
December 31, 2016 |
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
1,122
|
|
|
$
|
—
|
|
|
$
|
1,122
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
—
|
|
|
(1,360
|
)
|
|
—
|
|
|
(1,360
|
)
|
||||
Interest rate swap agreements
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
||||
Contingent consideration
|
—
|
|
|
—
|
|
|
(2,531
|
)
|
|
(2,531
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
(45,755
|
)
|
|
(45,755
|
)
|
|
Amount
|
||
Balance at December 31, 2015
|
$
|
10,403
|
|
Change in fair value of contingent consideration
|
(7,602
|
)
|
|
Effect of foreign currency translation
|
(270
|
)
|
|
Balance at December 31, 2016
|
2,531
|
|
|
Issuance of contingent consideration in connection with acquisition
|
10,544
|
|
|
Change in fair value of contingent consideration
|
(2,392
|
)
|
|
Payment of contingent consideration
|
(781
|
)
|
|
Effect of foreign currency translation
|
480
|
|
|
Balance at September 30, 2017
|
$
|
10,382
|
|
|
Amount
|
||
Balance at December 31, 2015
|
$
|
38,624
|
|
Addition to redeemable noncontrolling interest
|
826
|
|
|
Redemption of redeemable noncontrolling interest
|
(3,562
|
)
|
|
Net loss attributable to redeemable noncontrolling interest
|
(47,831
|
)
|
|
Adjustment of the redeemable noncontrolling interest to fair value
|
74,194
|
|
|
Effect of foreign currency translation attributable to redeemable noncontrolling interest
|
(16,496
|
)
|
|
Balance at December 31, 2016
|
45,755
|
|
|
Addition to redeemable noncontrolling interest
|
277
|
|
|
Net income attributable to redeemable noncontrolling interest
|
3,238
|
|
|
Adjustment of the redeemable noncontrolling interest to fair value
|
107,959
|
|
|
Effect of foreign currency translation attributable to redeemable noncontrolling interest
|
3,434
|
|
|
Balance at September 30, 2017
|
$
|
160,663
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||
Balance Sheet
Location
|
|
Fair Value
|
|
Balance Sheet
Location
|
|
Fair Value
|
|||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
Other assets
|
|
$
|
1,840
|
|
|
Other assets
|
|
$
|
707
|
|
Foreign currency exchange contracts
|
Other liabilities
|
|
—
|
|
|
Other liabilities
|
|
(51
|
)
|
||
Interest rate swap agreements
|
Other liabilities
|
|
(40
|
)
|
|
Other liabilities
|
|
(131
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
Other assets
|
|
257
|
|
|
Other assets
|
|
415
|
|
||
Foreign currency exchange contracts
|
Other liabilities
|
|
(2,248
|
)
|
|
Other liabilities
|
|
(1,309
|
)
|
||
Interest rate cap contracts
|
Other assets
|
|
2,724
|
|
|
Other assets
|
|
—
|
|
Derivatives Designated as Hedging Instruments
|
|
Gain or (Loss)
Recognized in OCI- Effective Portion |
|
Location of Gain
or (Loss) Reclassified from OCI into Income - Effective Portion |
|
Gain or (Loss)
Reclassified from OCI into Income - Effective Portion |
|
Location of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
|
Amount of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
||||||||||||||||||
|
Three Months Ended
September 30, |
|
|
|
Three Months Ended
September 30, |
|
|
|
Three Months Ended
September 30, |
|||||||||||||||||||
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
(27
|
)
|
|
$
|
989
|
|
|
Salaries and
employee benefits |
|
$
|
286
|
|
|
$
|
151
|
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
70
|
|
|
171
|
|
|
General and
administrative expenses |
|
35
|
|
|
26
|
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
||||||
Interest rate swap agreements
|
|
10
|
|
|
—
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
Derivatives Designated as Hedging Instruments
|
|
Gain or (Loss)
Recognized in OCI- Effective Portion |
|
Location of Gain
or (Loss) Reclassified from OCI into Income - Effective Portion |
|
Gain or (Loss)
Reclassified from OCI into Income - Effective Portion |
|
Location of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
|
Amount of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
||||||||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|||||||||||||||||||
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
1,708
|
|
|
$
|
1,284
|
|
|
Salaries and
employee benefits |
|
$
|
758
|
|
|
$
|
683
|
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
310
|
|
|
(19
|
)
|
|
General and
administrative expenses |
|
76
|
|
|
95
|
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
||||||
Interest rate swap agreements
|
|
29
|
|
|
—
|
|
|
Interest expense
|
|
110
|
|
|
—
|
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain or (Loss) Recognized in income on Derivative
|
|
Amount of Gain or (Loss) Recognized in Income on Derivative
|
||||||||||||||
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Foreign currency exchange contracts
|
|
Other income (expense)
|
|
$
|
(833
|
)
|
|
$
|
3,330
|
|
|
$
|
1,790
|
|
|
$
|
10,706
|
|
Interest rate cap contracts
|
|
Interest expense
|
|
919
|
|
|
—
|
|
|
919
|
|
|
—
|
|
||||
Interest rate swap agreements
|
|
Interest expense
|
|
—
|
|
|
39
|
|
|
110
|
|
|
83
|
|
|
Accretable
Yield
|
|
Estimate of
Zero Basis
Cash Flows
|
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
3,092,004
|
|
|
$
|
365,504
|
|
|
$
|
3,457,508
|
|
Revenue recognized, net
|
(211,718
|
)
|
|
(40,252
|
)
|
|
(251,970
|
)
|
|||
(Reductions) additions on existing portfolios, net
|
(90,138
|
)
|
|
57,446
|
|
|
(32,692
|
)
|
|||
Additions for current purchases, net
|
200,728
|
|
|
—
|
|
|
200,728
|
|
|||
Effect of foreign currency translation
|
38,712
|
|
|
467
|
|
|
39,179
|
|
|||
Balance at March 31, 2017
|
3,029,588
|
|
|
383,165
|
|
|
3,412,753
|
|
|||
Revenue recognized, net
|
(231,431
|
)
|
|
(40,805
|
)
|
|
(272,236
|
)
|
|||
Net additions on existing portfolios
|
225,021
|
|
|
9,888
|
|
|
234,909
|
|
|||
Additions for current purchases, net
|
258,687
|
|
|
—
|
|
|
258,687
|
|
|||
Effect of foreign currency translation
|
66,927
|
|
|
(753
|
)
|
|
66,174
|
|
|||
Balance at June 30, 2017
|
3,348,792
|
|
|
351,495
|
|
|
3,700,287
|
|
|||
Revenue recognized, net
|
(248,220
|
)
|
|
(35,368
|
)
|
|
(283,588
|
)
|
|||
Net additions on existing portfolios
|
27,162
|
|
|
1,539
|
|
|
28,701
|
|
|||
Additions for current purchases, net
|
336,725
|
|
|
—
|
|
|
336,725
|
|
|||
Effect of foreign currency translation
|
56,971
|
|
|
375
|
|
|
57,346
|
|
|||
Balance at September 30, 2017
|
$
|
3,521,430
|
|
|
$
|
318,041
|
|
|
$
|
3,839,471
|
|
|
Accretable
Yield
|
|
Estimate of
Zero Basis
Cash Flows
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
3,047,640
|
|
|
$
|
223,031
|
|
|
$
|
3,270,671
|
|
Revenue recognized, net
|
(238,547
|
)
|
|
(31,547
|
)
|
|
(270,094
|
)
|
|||
Net additions on existing portfolios
|
39,538
|
|
|
8,071
|
|
|
47,609
|
|
|||
Additions for current purchases, net
|
193,654
|
|
|
—
|
|
|
193,654
|
|
|||
Effect of foreign currency translation
|
(64,330
|
)
|
|
470
|
|
|
(63,860
|
)
|
|||
Balance at March 31, 2016
|
2,977,955
|
|
|
200,025
|
|
|
3,177,980
|
|
|||
Revenue recognized, net
|
(233,714
|
)
|
|
(33,738
|
)
|
|
(267,452
|
)
|
|||
Net additions on existing portfolios
|
59,459
|
|
|
95,135
|
|
|
154,594
|
|
|||
Additions for current purchases, net
|
183,217
|
|
|
—
|
|
|
183,217
|
|
|||
Effect of foreign currency translation
|
(181,223
|
)
|
|
245
|
|
|
(180,978
|
)
|
|||
Balance at June 30, 2016
|
2,805,694
|
|
|
261,667
|
|
|
3,067,361
|
|
|||
Revenue recognized, net
|
(119,543
|
)
|
|
(39,991
|
)
|
|
(159,534
|
)
|
|||
Net additions on existing portfolios
|
299,212
|
|
|
22,862
|
|
|
322,074
|
|
|||
Additions for current purchases, net
|
180,079
|
|
|
—
|
|
|
180,079
|
|
|||
Effect of foreign currency translation
|
(75,402
|
)
|
|
135
|
|
|
(75,267
|
)
|
|||
Balance at September 30, 2016
|
$
|
3,090,040
|
|
|
$
|
244,673
|
|
|
$
|
3,334,713
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,541,590
|
|
|
$
|
14,335
|
|
|
$
|
—
|
|
|
$
|
2,555,925
|
|
Purchases of receivable portfolios
|
292,332
|
|
|
—
|
|
|
—
|
|
|
292,332
|
|
||||
Disposals or transfers to held for sale
|
(3,536
|
)
|
|
(265
|
)
|
|
—
|
|
|
(3,801
|
)
|
||||
Gross collections
(1)
|
(407,435
|
)
|
|
(435
|
)
|
|
(35,126
|
)
|
|
(442,996
|
)
|
||||
Put-backs and Recalls
(2)
|
(407
|
)
|
|
—
|
|
|
(242
|
)
|
|
(649
|
)
|
||||
Foreign currency adjustments
|
44,366
|
|
|
46
|
|
|
—
|
|
|
44,412
|
|
||||
Revenue recognized
|
230,403
|
|
|
—
|
|
|
33,621
|
|
|
264,024
|
|
||||
Portfolio allowance reversals, net
|
17,817
|
|
|
—
|
|
|
1,747
|
|
|
19,564
|
|
||||
Balance, end of period
|
$
|
2,715,130
|
|
|
$
|
13,681
|
|
|
$
|
—
|
|
|
$
|
2,728,811
|
|
Revenue as a percentage of collections
(3)
|
56.5
|
%
|
|
0.0
|
%
|
|
95.7
|
%
|
|
59.6
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,465,967
|
|
|
$
|
3,626
|
|
|
$
|
—
|
|
|
$
|
2,469,593
|
|
Purchases of receivable portfolios
|
206,359
|
|
|
—
|
|
|
—
|
|
|
206,359
|
|
||||
Gross collections
(1)
|
(366,321
|
)
|
|
(706
|
)
|
|
(39,934
|
)
|
|
(406,961
|
)
|
||||
Put-backs and Recalls
(2)
|
(3,103
|
)
|
|
—
|
|
|
(57
|
)
|
|
(3,160
|
)
|
||||
Foreign currency adjustments
|
(27,361
|
)
|
|
(173
|
)
|
|
—
|
|
|
(27,534
|
)
|
||||
Revenue recognized
|
212,664
|
|
|
—
|
|
|
38,317
|
|
|
250,981
|
|
||||
Portfolio (allowance) reversals, net
|
(93,121
|
)
|
|
—
|
|
|
1,674
|
|
|
(91,447
|
)
|
||||
Balance, end of period
|
$
|
2,395,084
|
|
|
$
|
2,747
|
|
|
$
|
—
|
|
|
$
|
2,397,831
|
|
Revenue as a percentage of collections
(3)
|
58.1
|
%
|
|
0.0
|
%
|
|
96.0
|
%
|
|
61.7
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Put-backs represent accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”). Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement (“Recalls”).
|
(3)
|
Revenue as a percentage of collections excludes the effects of net portfolio allowances or net portfolio allowance reversals.
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,368,366
|
|
|
$
|
14,443
|
|
|
$
|
—
|
|
|
$
|
2,382,809
|
|
Purchases of receivable portfolios
|
756,305
|
|
|
1,169
|
|
|
—
|
|
|
757,474
|
|
||||
Disposals or transfers to held for sale
|
(11,004
|
)
|
|
(265
|
)
|
|
—
|
|
|
(11,269
|
)
|
||||
Gross collections
(1)
|
(1,212,357
|
)
|
|
(1,534
|
)
|
|
(116,150
|
)
|
|
(1,330,041
|
)
|
||||
Put-backs and Recalls
(2)
|
(5,401
|
)
|
|
—
|
|
|
(275
|
)
|
|
(5,676
|
)
|
||||
Foreign currency adjustments
|
127,852
|
|
|
(132
|
)
|
|
—
|
|
|
127,720
|
|
||||
Revenue recognized
|
665,818
|
|
|
—
|
|
|
111,451
|
|
|
777,269
|
|
||||
Portfolio allowance reversals, net
|
25,551
|
|
|
—
|
|
|
4,974
|
|
|
30,525
|
|
||||
Balance, end of period
|
$
|
2,715,130
|
|
|
$
|
13,681
|
|
|
$
|
—
|
|
|
$
|
2,728,811
|
|
Revenue as a percentage of collections
(3)
|
54.9
|
%
|
|
0.0
|
%
|
|
96.0
|
%
|
|
58.4
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,436,054
|
|
|
$
|
4,615
|
|
|
$
|
—
|
|
|
$
|
2,440,669
|
|
Purchases of receivable portfolios
|
696,228
|
|
|
—
|
|
|
—
|
|
|
696,228
|
|
||||
Transfer of portfolios
|
(96
|
)
|
|
96
|
|
|
—
|
|
|
—
|
|
||||
Gross collections
(1)
|
(1,181,546
|
)
|
|
(2,063
|
)
|
|
(105,257
|
)
|
|
(1,288,866
|
)
|
||||
Put-backs and Recalls
(2)
|
(19,680
|
)
|
|
(11
|
)
|
|
(19
|
)
|
|
(19,710
|
)
|
||||
Foreign currency adjustments
|
(127,680
|
)
|
|
110
|
|
|
—
|
|
|
(127,570
|
)
|
||||
Revenue recognized
|
683,752
|
|
|
—
|
|
|
100,105
|
|
|
783,857
|
|
||||
Portfolio (allowance) reversals, net
|
(91,948
|
)
|
|
—
|
|
|
5,171
|
|
|
(86,777
|
)
|
||||
Balance, end of period
|
$
|
2,395,084
|
|
|
$
|
2,747
|
|
|
$
|
—
|
|
|
$
|
2,397,831
|
|
Revenue as a percentage of collections
(3)
|
57.9
|
%
|
|
0.0
|
%
|
|
95.1
|
%
|
|
60.8
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Put-backs represent accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”). Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement (“Recalls”).
|
(3)
|
Revenue as a percentage of collections excludes the effects of net portfolio allowances or net portfolio allowance reversals.
|
|
Valuation Allowance
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Balance at beginning of period
|
$
|
130,675
|
|
|
$
|
55,918
|
|
|
$
|
137,037
|
|
|
$
|
60,588
|
|
Provision for portfolio allowances
|
10,181
|
|
|
94,011
|
|
|
10,863
|
|
|
94,011
|
|
||||
Reversal of prior allowances
|
(29,745
|
)
|
|
(2,564
|
)
|
|
(41,388
|
)
|
|
(7,234
|
)
|
||||
Effect of foreign currency translation
|
1,759
|
|
|
(2,890
|
)
|
|
6,358
|
|
|
(2,890
|
)
|
||||
Balance at end of period
|
$
|
112,870
|
|
|
$
|
144,475
|
|
|
$
|
112,870
|
|
|
$
|
144,475
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Court costs advanced
|
$
|
724,625
|
|
|
$
|
654,356
|
|
Court costs recovered
|
(292,454
|
)
|
|
(261,243
|
)
|
||
Court costs reserve
|
(354,810
|
)
|
|
(327,926
|
)
|
||
Deferred court costs
|
$
|
77,361
|
|
|
$
|
65,187
|
|
|
Court Cost Reserve
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Balance at beginning of period
|
$
|
(345,971
|
)
|
|
$
|
(319,651
|
)
|
|
$
|
(327,926
|
)
|
|
$
|
(318,784
|
)
|
Provision for court costs
|
(19,767
|
)
|
|
(25,599
|
)
|
|
(60,031
|
)
|
|
(55,976
|
)
|
||||
Net down of reserve after deferral period
|
12,419
|
|
|
12,955
|
|
|
36,992
|
|
|
40,028
|
|
||||
Effect of foreign currency translation
|
(1,491
|
)
|
|
560
|
|
|
(3,845
|
)
|
|
2,997
|
|
||||
Balance at end of period
|
$
|
(354,810
|
)
|
|
$
|
(331,735
|
)
|
|
$
|
(354,810
|
)
|
|
$
|
(331,735
|
)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Deferred tax assets
|
$
|
57,891
|
|
|
$
|
51,077
|
|
Identifiable intangible assets, net
|
29,267
|
|
|
28,243
|
|
||
Assets held for sale
|
27,575
|
|
|
21,147
|
|
||
Service fee receivables
|
26,144
|
|
|
15,156
|
|
||
Prepaid expenses
|
19,966
|
|
|
18,036
|
|
||
Other financial receivables
|
19,212
|
|
|
18,732
|
|
||
Derivative instruments
|
4,821
|
|
|
1,122
|
|
||
Security deposits
|
3,132
|
|
|
2,781
|
|
||
Receivable from seller
|
756
|
|
|
5,388
|
|
||
Other
|
66,229
|
|
|
53,765
|
|
||
Total
|
$
|
254,993
|
|
|
$
|
215,447
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Encore revolving credit facility
|
$
|
149,563
|
|
|
$
|
578,000
|
|
Encore term loan facility
|
188,688
|
|
|
164,615
|
|
||
Encore senior secured notes
|
327,058
|
|
|
11,320
|
|
||
Encore convertible notes
|
548,500
|
|
|
448,500
|
|
||
Less: debt discount
|
(35,217
|
)
|
|
(31,968
|
)
|
||
Cabot senior secured notes
|
1,202,803
|
|
|
1,280,241
|
|
||
Add: debt premium
|
—
|
|
|
17,686
|
|
||
Less: debt discount
|
(2,033
|
)
|
|
(2,200
|
)
|
||
Cabot senior revolving credit facility
|
75,693
|
|
|
33,218
|
|
||
Cabot securitisation senior facility
|
349,288
|
|
|
—
|
|
||
Preferred equity certificates
|
244,422
|
|
|
205,975
|
|
||
Other credit facilities
|
68,854
|
|
|
74,551
|
|
||
Other
|
72,622
|
|
|
62,608
|
|
||
Capital lease obligations
|
3,148
|
|
|
5,091
|
|
||
|
3,193,389
|
|
|
2,847,637
|
|
||
Less: debt issuance costs, net of amortization
|
(44,892
|
)
|
|
(41,654
|
)
|
||
Total
|
$
|
3,148,497
|
|
|
$
|
2,805,983
|
|
•
|
Revolving Credit Facility commitments of (1)
$626.0 million
that expire in December 2021, (2)
$168.6 million
that expire in February 2019 and (3)
$32.1 million
that expire in November 2017, in each case with interest at a floating rate equal to, at the Company’s option, either: (a) reserve adjusted London Interbank Offered Rate (“LIBOR”), plus a spread that ranges from
250
to
300
basis points depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (b) alternate base rate, plus a spread that ranges from
150
to
200
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. “Alternate base rate,” as defined in the Restated Credit Agreement, means the highest of (i) the per annum rate which the administrative agent publicly announces from time to time as its prime lending rate, (ii) the federal funds effective rate from time to time, plus
0.5%
per annum, (iii) reserved adjusted LIBOR determined on a daily basis for a one month interest period, plus
1.0%
per annum and (iv) zero;
|
•
|
A
$170.1 million
term loan maturing in December 2021, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
250
to
300
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. As of September 26, 2017, the date of the last amendment to the Restated Credit Agreement, principal amortizes
$4.3 million
in 2017,
$8.6 million
in 2018, and
$12.9 million
in each of 2019, 2020 and 2021 with the remaining principal due at the end of the term;
|
•
|
A
$17.0 million
term loan maturing in February 2019, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
250
to
300
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. As of September 26, 2017, the date of the last amendment to the Restated Credit Agreement, principal amortizes
$1.1 million
in 2017 and
$2.2 million
in 2018 with the remaining principal due at the end of the term;
|
•
|
A
$4.5 million
term loan maturing in November 2017, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
250
to
300
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200
basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. Principal amortizes
$0.5 million
in 2017 with the remaining principal due at the end of the term;
|
•
|
A borrowing base under the Revolving Credit Facility equal to
35%
of all eligible non-bankruptcy estimated remaining collections plus
55%
of eligible estimated remaining collections for consumer receivables subject to bankruptcy;
|
•
|
A maximum cash flow leverage ratio permitted of
3.00
:1.00;
|
•
|
A maximum cash flow first-lien leverage ratio of
2.00
:1.00;
|
•
|
A minimum interest coverage ratio of
1.75
:1.00;
|
•
|
The allowance of indebtedness in the form of senior secured notes not to exceed
$350.0 million
;
|
•
|
The allowance of additional unsecured or subordinated indebtedness not to exceed
$1.1 billion
, including junior lien indebtedness not to exceed
$400.0 million
;
|
•
|
Restrictions and covenants, which limit the payment of dividends and the incurrence of additional indebtedness and liens, among other limitations;
|
•
|
Repurchases of up to
$150.0 million
of Encore’s common stock after July 9, 2015, subject to compliance with certain covenants and available borrowing capacity;
|
•
|
A change of control definition, that excludes acquisitions of stock by Red Mountain Capital Partners LLC, JCF FPK I, LP and their respective affiliates of up to
50%
of the outstanding shares of Encore’s voting stock;
|
•
|
Events of default which, upon occurrence, may permit the lenders to terminate the facility and declare all amounts outstanding to be immediately due and payable;
|
•
|
A pre-approved acquisition limit of
$225.0 million
per fiscal year;
|
•
|
A basket to allow for investments not to exceed the greater of (1)
200%
of the consolidated net worth of Encore and its restricted subsidiaries; and (2) an unlimited amount such that after giving effect to the making of any investment, the cash flow leverage ratio is less than
1.25
:1:00;
|
•
|
A basket to allow for investments in persons organized under the laws of Canada in the amount of
$50.0 million
;
|
•
|
A requirement that Encore and its restricted subsidiaries, for the four-month period ending February 2019, have sufficient cash or availability under the Revolving Credit Facility (excluding availability under revolving commitments expiring in February 2019) to satisfy any amounts due under the revolving commitments that expire in February 2019 and the sub-tranche of the Term Loan Facility that expires in February 2019;
|
•
|
Collateralization by all assets of the Company, other than the assets of certain foreign subsidiaries and all unrestricted subsidiaries as defined in the Restated Credit Agreement.
|
|
2017 Convertible Notes
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
|
2022 Convertible Notes
|
||||||||
Initial conversion price
|
$
|
31.56
|
|
|
$
|
45.72
|
|
|
$
|
59.39
|
|
|
$
|
45.57
|
|
Closing stock price at date of issuance
|
$
|
25.66
|
|
|
$
|
33.35
|
|
|
$
|
47.51
|
|
|
$
|
35.05
|
|
Closing stock price date
|
November 27,
2012 |
|
|
June 24,
2013 |
|
|
March 5,
2014 |
|
|
February 27,
2017 |
|
||||
Conversion rate (shares per $1,000 principal amount)
|
31.6832
|
|
|
21.8718
|
|
|
16.8386
|
|
|
21.9467
|
|
||||
Conversion date
(1)
|
May 27,
2017 |
|
|
January 1,
2020 |
|
|
September 15,
2020 |
|
|
September 15,
2021 |
|
(1)
|
The 2017 Convertible Notes became convertible on demand on January 2, 2014, as certain early conversion events were satisfied. Refer to “Conversion and Earnings Per Share Impact” section below for further details.
|
|
2017 Convertible Notes
(1)
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
|
2022 Convertible Notes
|
||||||||
Debt component
|
$
|
64,646
|
|
|
$
|
140,247
|
|
|
$
|
143,645
|
|
|
$
|
137,266
|
|
Equity component
|
$
|
354
|
|
|
$
|
32,253
|
|
|
$
|
17,355
|
|
|
$
|
12,734
|
|
Equity issuance cost
|
$
|
788
|
|
|
$
|
1,106
|
|
|
$
|
581
|
|
|
$
|
398
|
|
Stated interest rate
|
3.000
|
%
|
|
3.000
|
%
|
|
2.875
|
%
|
|
3.250
|
%
|
||||
Effective interest rate
|
3.750
|
%
|
|
6.350
|
%
|
|
4.700
|
%
|
|
5.200
|
%
|
(1)
|
As discussed above, in February 2017, the Company repurchased
$50.0 million
aggregate principal amount of its 2017 Convertible Notes. This transaction is treated as debt extinguishment and the effective interest rate has been updated from
6.000%
to
3.750%
, which represents the effective interest rate for the remaining 2017 Convertible Notes at the time of repurchase.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Liability component—principal amount
|
$
|
548,500
|
|
|
$
|
448,500
|
|
Unamortized debt discount
|
(35,217
|
)
|
|
(31,968
|
)
|
||
Liability component—net carrying amount
|
$
|
513,283
|
|
|
$
|
416,532
|
|
Equity component
|
$
|
62,619
|
|
|
$
|
61,314
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense—stated coupon rate
|
$
|
4,117
|
|
|
$
|
3,317
|
|
|
$
|
11,705
|
|
|
$
|
9,925
|
|
Interest expense—amortization of debt discount
|
2,473
|
|
|
2,501
|
|
|
7,374
|
|
|
7,366
|
|
||||
Total interest expense—convertible notes
|
$
|
6,590
|
|
|
$
|
5,818
|
|
|
$
|
19,079
|
|
|
$
|
17,291
|
|
|
2017 Convertible Notes
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
||||||
Cost of the hedge transaction(s)
|
$
|
50,595
|
|
|
$
|
18,113
|
|
|
$
|
19,545
|
|
Initial conversion price
|
$
|
31.56
|
|
|
$
|
45.72
|
|
|
$
|
59.39
|
|
Effective conversion price
|
$
|
60.00
|
|
|
$
|
61.55
|
|
|
$
|
83.14
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense—stated coupon rate
|
$
|
24,285
|
|
|
$
|
25,870
|
|
|
$
|
73,278
|
|
|
$
|
81,359
|
|
Interest income—accretion of debt premium
|
(758
|
)
|
|
(2,542
|
)
|
|
(2,855
|
)
|
|
(7,854
|
)
|
||||
Interest expense—amortization of debt discount
|
119
|
|
|
119
|
|
|
345
|
|
|
503
|
|
||||
Total interest expense—Cabot senior secured notes
|
$
|
23,646
|
|
|
$
|
23,447
|
|
|
$
|
70,768
|
|
|
$
|
74,008
|
|
•
|
Interest at LIBOR (or EURIBOR for any loan drawn in euro) plus
3.25%
;
|
•
|
A restrictive covenant that limits the loan to value ratio to
0.75
in the event that the Cabot Credit Facility is more than
20%
utilized;
|
•
|
A restrictive covenant that limits the super senior loan (i.e. the Cabot Credit Facility and any super priority hedging liabilities) to value ratio to
0.25
in the event that the Cabot Credit Facility is more than
20%
utilized;
|
•
|
Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
|
•
|
Events of default which, upon occurrence, may permit the lenders to terminate the Cabot Credit Facility and declare all amounts outstanding to be immediately due and payable.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Federal provision
|
35.0
|
%
|
|
(35.0
|
)%
|
|
35.0
|
%
|
|
35.0
|
%
|
State provision (benefit)
|
3.3
|
%
|
|
(2.2
|
)%
|
|
3.3
|
%
|
|
2.2
|
%
|
International (benefit) provision
(1)
|
(7.9
|
)%
|
|
16.0
|
%
|
|
(2.2
|
)%
|
|
19.3
|
%
|
Permanent items
|
(0.7
|
)%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
3.3
|
%
|
Other
(2)
|
0.0
|
%
|
|
(0.1
|
)%
|
|
0.0
|
%
|
|
(6.7
|
)%
|
Effective rate
|
29.7
|
%
|
|
(21.0
|
)%
|
|
36.3
|
%
|
|
53.1
|
%
|
(1)
|
Relates primarily to lower tax rates on income or loss attributable to international operations. Effective January 1, 2017, there was a change to U.K. tax law that resulted in an unfavorable deductibility on interest expenses as compared to the prior period.
|
(2)
|
Includes the effect of discrete items.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
(1)
:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
154,815
|
|
|
$
|
165,933
|
|
|
$
|
498,744
|
|
|
$
|
502,776
|
|
International
|
|
|
|
|
|
|
|
||||||||
Europe
(2)
|
127,687
|
|
|
(9,540
|
)
|
|
300,379
|
|
|
188,223
|
|
||||
Other foreign countries
|
24,197
|
|
|
23,022
|
|
|
70,434
|
|
|
66,875
|
|
||||
|
151,884
|
|
|
13,482
|
|
|
370,813
|
|
|
255,098
|
|
||||
Total
|
$
|
306,699
|
|
|
$
|
179,415
|
|
|
$
|
869,557
|
|
|
$
|
757,874
|
|
(1)
|
Revenues are attributed to countries based on location of customer.
|
(2)
|
Based on the financial information that is used to produce the general-purpose financial statements, providing further geographic information is impracticable.
|
|
Total
|
||
Balance, December 31, 2016
|
$
|
785,032
|
|
Goodwill acquired
|
11,142
|
|
|
Effect of foreign currency translation
|
56,988
|
|
|
Balance, September 30, 2017
|
$
|
853,162
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Customer relationships
|
$
|
26,176
|
|
|
$
|
(5,562
|
)
|
|
$
|
20,614
|
|
|
$
|
21,200
|
|
|
$
|
(3,220
|
)
|
|
$
|
17,980
|
|
Developed technologies
|
7,049
|
|
|
(5,214
|
)
|
|
1,835
|
|
|
6,497
|
|
|
(3,891
|
)
|
|
2,606
|
|
||||||
Trade name and other
|
13,616
|
|
|
(6,798
|
)
|
|
6,818
|
|
|
12,566
|
|
|
(4,909
|
)
|
|
7,657
|
|
||||||
Total intangible assets
|
$
|
46,841
|
|
|
$
|
(17,574
|
)
|
|
$
|
29,267
|
|
|
$
|
40,263
|
|
|
$
|
(12,020
|
)
|
|
$
|
28,243
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
$
|
108,047
|
|
|
$
|
131,671
|
|
|
$
|
342,070
|
|
|
$
|
379,300
|
|
Consumer bankruptcy receivables
|
3,113
|
|
|
9,914
|
|
|
24,250
|
|
|
33,776
|
|
||||
Subtotal
|
111,160
|
|
|
141,585
|
|
|
$
|
366,320
|
|
|
$
|
413,076
|
|
||
Europe:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
177,266
|
|
|
30,709
|
|
|
353,075
|
|
|
206,665
|
|
||||
Other
|
—
|
|
|
12,258
|
|
|
1,561
|
|
|
15,696
|
|
||||
Subtotal
|
177,266
|
|
|
42,967
|
|
|
354,636
|
|
|
222,361
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
3,906
|
|
|
20,186
|
|
|
31,870
|
|
|
52,691
|
|
||||
Other
|
—
|
|
|
1,621
|
|
|
4,648
|
|
|
8,100
|
|
||||
Subtotal
|
3,906
|
|
|
21,807
|
|
|
36,518
|
|
|
60,791
|
|
||||
Total purchases
|
$
|
292,332
|
|
|
$
|
206,359
|
|
|
$
|
757,474
|
|
|
$
|
696,228
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
$
|
121,639
|
|
|
$
|
111,753
|
|
|
$
|
381,708
|
|
|
$
|
362,010
|
|
Legal collections
|
134,011
|
|
|
130,985
|
|
|
421,984
|
|
|
427,972
|
|
||||
Collection agencies
(1)
|
13,258
|
|
|
12,875
|
|
|
39,156
|
|
|
41,630
|
|
||||
Subtotal
|
268,908
|
|
|
255,613
|
|
|
842,848
|
|
|
831,612
|
|
||||
Europe:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
75,940
|
|
|
61,306
|
|
|
226,139
|
|
|
180,742
|
|
||||
Legal collections
|
26,956
|
|
|
31,502
|
|
|
88,469
|
|
|
94,596
|
|
||||
Collection agencies
|
41,046
|
|
|
28,730
|
|
|
87,980
|
|
|
100,684
|
|
||||
Subtotal
|
143,942
|
|
|
121,538
|
|
|
402,588
|
|
|
376,022
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
23,797
|
|
|
22,518
|
|
|
66,232
|
|
|
60,726
|
|
||||
Legal collections
|
2,108
|
|
|
2,634
|
|
|
5,757
|
|
|
7,775
|
|
||||
Collection agencies
|
4,241
|
|
|
4,658
|
|
|
12,616
|
|
|
12,731
|
|
||||
Subtotal
|
30,146
|
|
|
29,810
|
|
|
84,605
|
|
|
81,232
|
|
||||
Total collections
|
$
|
442,996
|
|
|
$
|
406,961
|
|
|
$
|
1,330,041
|
|
|
$
|
1,288,866
|
|
(1)
|
Collections through our collection agency channel in the United States include accounts subject to bankruptcy filings collected by others. Additionally, collection agency collections often include accounts purchased where we maintain the collection agency servicing until the accounts can be recalled and placed in our collection channels.
|
|
Three Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
283,588
|
|
|
92.5
|
%
|
|
$
|
159,534
|
|
|
88.9
|
%
|
Other revenues
|
23,111
|
|
|
7.5
|
%
|
|
19,881
|
|
|
11.1
|
%
|
||
Total revenues
|
306,699
|
|
|
100.0
|
%
|
|
179,415
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
77,232
|
|
|
25.2
|
%
|
|
67,783
|
|
|
37.8
|
%
|
||
Cost of legal collections
|
48,094
|
|
|
15.7
|
%
|
|
56,932
|
|
|
31.7
|
%
|
||
Other operating expenses
|
25,859
|
|
|
8.4
|
%
|
|
24,131
|
|
|
13.5
|
%
|
||
Collection agency commissions
|
10,622
|
|
|
3.4
|
%
|
|
8,848
|
|
|
4.9
|
%
|
||
General and administrative expenses
|
32,500
|
|
|
10.6
|
%
|
|
34,871
|
|
|
19.4
|
%
|
||
Depreciation and amortization
|
8,522
|
|
|
2.8
|
%
|
|
8,032
|
|
|
4.5
|
%
|
||
Total operating expenses
|
202,829
|
|
|
66.1
|
%
|
|
200,597
|
|
|
111.8
|
%
|
||
Income (loss) from operations
|
103,870
|
|
|
33.9
|
%
|
|
(21,182
|
)
|
|
(11.8
|
)%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(52,755
|
)
|
|
(17.2
|
)%
|
|
(48,632
|
)
|
|
(27.1
|
)%
|
||
Other income
|
8,873
|
|
|
2.9
|
%
|
|
4,100
|
|
|
2.3
|
%
|
||
Total other expense
|
(43,882
|
)
|
|
(14.3
|
)%
|
|
(44,532
|
)
|
|
(24.8
|
)%
|
||
Income (loss) before income taxes
|
59,988
|
|
|
19.6
|
%
|
|
(65,714
|
)
|
|
(36.6
|
)%
|
||
(Provision) benefit for income taxes
|
(17,844
|
)
|
|
(5.9
|
)%
|
|
13,768
|
|
|
7.6
|
%
|
||
Net income (loss)
|
42,144
|
|
|
13.7
|
%
|
|
(51,946
|
)
|
|
(29.0
|
)%
|
||
Net (income) loss attributable to noncontrolling interest
|
(13,950
|
)
|
|
(4.5
|
)%
|
|
50,422
|
|
|
28.2
|
%
|
||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
28,194
|
|
|
9.2
|
%
|
|
$
|
(1,524
|
)
|
|
(0.8
|
)%
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
807,794
|
|
|
92.9
|
%
|
|
$
|
697,080
|
|
|
92.0
|
%
|
Other revenues
|
61,763
|
|
|
7.1
|
%
|
|
60,794
|
|
|
8.0
|
%
|
||
Total revenues
|
869,557
|
|
|
100.0
|
%
|
|
757,874
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
221,296
|
|
|
25.4
|
%
|
|
212,924
|
|
|
28.1
|
%
|
||
Cost of legal collections
|
149,460
|
|
|
17.2
|
%
|
|
158,047
|
|
|
20.9
|
%
|
||
Other operating expenses
|
76,249
|
|
|
8.8
|
%
|
|
75,420
|
|
|
10.0
|
%
|
||
Collection agency commissions
|
33,678
|
|
|
3.9
|
%
|
|
28,242
|
|
|
3.7
|
%
|
||
General and administrative expenses
|
102,750
|
|
|
11.8
|
%
|
|
103,044
|
|
|
13.6
|
%
|
||
Depreciation and amortization
|
25,819
|
|
|
3.0
|
%
|
|
26,128
|
|
|
3.4
|
%
|
||
Total operating expenses
|
609,252
|
|
|
70.1
|
%
|
|
603,805
|
|
|
79.7
|
%
|
||
Income from operations
|
260,305
|
|
|
29.9
|
%
|
|
154,069
|
|
|
20.3
|
%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(152,469
|
)
|
|
(17.5
|
)%
|
|
(149,920
|
)
|
|
(19.8
|
)%
|
||
Other income
|
12,004
|
|
|
1.4
|
%
|
|
14,358
|
|
|
1.9
|
%
|
||
Total other expense
|
(140,465
|
)
|
|
(16.1
|
)%
|
|
(135,562
|
)
|
|
(17.9
|
)%
|
||
Income from continuing operations before income taxes
|
119,840
|
|
|
13.8
|
%
|
|
18,507
|
|
|
2.4
|
%
|
||
Provision for income taxes
|
(43,442
|
)
|
|
(5.0
|
)%
|
|
(9,831
|
)
|
|
(1.3
|
)%
|
||
Income from continuing operations
|
76,398
|
|
|
8.8
|
%
|
|
8,676
|
|
|
1.1
|
%
|
||
Loss from discontinued operations, net of tax
|
(199
|
)
|
|
0.0
|
%
|
|
(3,182
|
)
|
|
(0.4
|
)%
|
||
Net income
|
76,199
|
|
|
8.8
|
%
|
|
5,494
|
|
|
0.7
|
%
|
||
Net (income) loss attributable to noncontrolling interest
|
(5,652
|
)
|
|
(0.7
|
)%
|
|
48,264
|
|
|
6.4
|
%
|
||
Net income attributable to Encore Capital Group, Inc. stockholders
|
$
|
70,547
|
|
|
8.1
|
%
|
|
$
|
53,758
|
|
|
7.1
|
%
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 2016
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
(2)
|
$
|
120,914
|
|
|
$
|
—
|
|
|
$
|
120,914
|
|
|
$
|
(12,842
|
)
|
|
$
|
—
|
|
|
$
|
(12,842
|
)
|
Total operating expenses
|
(51,034
|
)
|
|
—
|
|
|
(51,034
|
)
|
|
(58,074
|
)
|
|
—
|
|
|
(58,074
|
)
|
||||||
Income (loss) from operations
|
69,880
|
|
|
—
|
|
|
69,880
|
|
|
(70,916
|
)
|
|
—
|
|
|
(70,916
|
)
|
||||||
Interest expense-non-PEC
|
(27,632
|
)
|
|
—
|
|
|
(27,632
|
)
|
|
(26,472
|
)
|
|
—
|
|
|
(26,472
|
)
|
||||||
PEC interest (expense) income
|
(12,994
|
)
|
|
6,368
|
|
|
(6,626
|
)
|
|
(11,575
|
)
|
|
5,672
|
|
|
(5,903
|
)
|
||||||
Other income
|
6,808
|
|
|
—
|
|
|
6,808
|
|
|
4,845
|
|
|
—
|
|
|
4,845
|
|
||||||
Income (loss) before income taxes
|
36,062
|
|
|
6,368
|
|
|
42,430
|
|
|
(104,118
|
)
|
|
5,672
|
|
|
(98,446
|
)
|
||||||
(Provision) benefit for income taxes
|
(8,374
|
)
|
|
—
|
|
|
(8,374
|
)
|
|
17,382
|
|
|
—
|
|
|
17,382
|
|
||||||
Net income (loss)
|
27,688
|
|
|
6,368
|
|
|
34,056
|
|
|
(86,736
|
)
|
|
5,672
|
|
|
(81,064
|
)
|
||||||
Net (income) loss attributable to noncontrolling interest
|
(3,796
|
)
|
|
(11,922
|
)
|
|
(15,718
|
)
|
|
12,087
|
|
|
37,250
|
|
|
49,337
|
|
||||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
23,892
|
|
|
$
|
(5,554
|
)
|
|
$
|
18,338
|
|
|
$
|
(74,649
|
)
|
|
$
|
42,922
|
|
|
$
|
(31,727
|
)
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
|
$
|
280,743
|
|
|
$
|
—
|
|
|
$
|
280,743
|
|
|
$
|
168,819
|
|
|
$
|
—
|
|
|
$
|
168,819
|
|
Total operating expenses
|
(142,864
|
)
|
|
—
|
|
|
(142,864
|
)
|
|
(159,054
|
)
|
|
—
|
|
|
(159,054
|
)
|
||||||
Income from operations
|
137,879
|
|
|
—
|
|
|
137,879
|
|
|
9,765
|
|
|
—
|
|
|
9,765
|
|
||||||
Interest expense-non-PEC
|
(80,355
|
)
|
|
—
|
|
|
(80,355
|
)
|
|
(83,323
|
)
|
|
—
|
|
|
(83,323
|
)
|
||||||
PEC interest (expense) income
|
(37,606
|
)
|
|
18,429
|
|
|
(19,177
|
)
|
|
(36,638
|
)
|
|
17,954
|
|
|
(18,684
|
)
|
||||||
Other income
|
9,348
|
|
|
—
|
|
|
9,348
|
|
|
16,243
|
|
|
—
|
|
|
16,243
|
|
||||||
Income (loss) before income taxes
|
29,266
|
|
|
18,429
|
|
|
47,695
|
|
|
(93,953
|
)
|
|
17,954
|
|
|
(75,999
|
)
|
||||||
(Provision) benefit for income taxes
|
(11,556
|
)
|
|
—
|
|
|
(11,556
|
)
|
|
13,565
|
|
|
—
|
|
|
13,565
|
|
||||||
Net income (loss)
|
17,710
|
|
|
18,429
|
|
|
36,139
|
|
|
(80,388
|
)
|
|
17,954
|
|
|
(62,434
|
)
|
||||||
Net (income) loss attributable to noncontrolling interest
|
(2,533
|
)
|
|
(7,573
|
)
|
|
(10,106
|
)
|
|
11,246
|
|
|
34,502
|
|
|
45,748
|
|
||||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
15,177
|
|
|
$
|
10,856
|
|
|
$
|
26,033
|
|
|
$
|
(69,142
|
)
|
|
$
|
52,456
|
|
|
$
|
(16,686
|
)
|
(1)
|
Includes only the results of operations related to Janus Holdings and therefore does not represent the complete financial performance of Encore Europe.
|
(2)
|
Total revenues are net of the portfolio allowance charges recorded on certain pool groups at Cabot during the three months ended September 30, 2016.
|
|
Three Months Ended September 30, 2017
|
|
As of
September 30, 2017 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
32,460
|
|
|
$
|
30,991
|
|
|
95.5
|
%
|
|
$
|
1,747
|
|
|
11.7
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
444
|
|
|
6
|
|
|
1.4
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2008
|
1,161
|
|
|
418
|
|
|
36.0
|
%
|
|
—
|
|
|
0.2
|
%
|
|
2,187
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2011
|
4,584
|
|
|
4,072
|
|
|
88.8
|
%
|
|
—
|
|
|
1.5
|
%
|
|
5,119
|
|
|
25.0
|
%
|
||||
2012
|
17,102
|
|
|
12,035
|
|
|
70.4
|
%
|
|
(2,337
|
)
|
|
4.6
|
%
|
|
18,042
|
|
|
18.5
|
%
|
||||
2013
|
32,821
|
|
|
22,843
|
|
|
69.6
|
%
|
|
—
|
|
|
8.7
|
%
|
|
53,250
|
|
|
12.7
|
%
|
||||
2014
|
32,838
|
|
|
17,949
|
|
|
54.7
|
%
|
|
(7,844
|
)
|
|
6.8
|
%
|
|
125,059
|
|
|
4.4
|
%
|
||||
2015
|
42,711
|
|
|
18,460
|
|
|
43.2
|
%
|
|
—
|
|
|
7.0
|
%
|
|
222,897
|
|
|
2.6
|
%
|
||||
2016
|
70,750
|
|
|
33,276
|
|
|
47.0
|
%
|
|
—
|
|
|
12.6
|
%
|
|
402,542
|
|
|
2.6
|
%
|
||||
2017
|
34,037
|
|
|
23,185
|
|
|
68.1
|
%
|
|
—
|
|
|
8.8
|
%
|
|
346,524
|
|
|
2.8
|
%
|
||||
Subtotal
|
268,908
|
|
|
163,235
|
|
|
60.7
|
%
|
|
(8,434
|
)
|
|
61.9
|
%
|
|
1,175,620
|
|
|
3.6
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
36,767
|
|
|
24,991
|
|
|
68.0
|
%
|
|
26,325
|
|
|
9.5
|
%
|
|
269,158
|
|
|
3.1
|
%
|
||||
2014
|
35,104
|
|
|
21,115
|
|
|
60.1
|
%
|
|
1,673
|
|
|
8.0
|
%
|
|
294,938
|
|
|
2.4
|
%
|
||||
2015
|
24,746
|
|
|
13,513
|
|
|
54.6
|
%
|
|
—
|
|
|
5.1
|
%
|
|
240,126
|
|
|
1.9
|
%
|
||||
2016
|
24,782
|
|
|
11,434
|
|
|
46.1
|
%
|
|
—
|
|
|
4.3
|
%
|
|
215,499
|
|
|
1.9
|
%
|
||||
2017
|
22,543
|
|
|
12,463
|
|
|
55.3
|
%
|
|
—
|
|
|
4.7
|
%
|
|
352,591
|
|
|
1.7
|
%
|
||||
Subtotal
|
143,942
|
|
|
83,516
|
|
|
58.0
|
%
|
|
27,998
|
|
|
31.6
|
%
|
|
1,372,312
|
|
|
2.2
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
2,666
|
|
|
2,630
|
|
|
98.6
|
%
|
|
—
|
|
|
1.0
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
172
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
308
|
|
|
0.0
|
%
|
||||
2014
|
1,910
|
|
|
4,485
|
|
|
234.8
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,215
|
|
|
2.4
|
%
|
||||
2015
|
10,976
|
|
|
5,577
|
|
|
50.8
|
%
|
|
—
|
|
|
2.1
|
%
|
|
39,487
|
|
|
4.3
|
%
|
||||
2016
|
8,794
|
|
|
3,453
|
|
|
39.3
|
%
|
|
—
|
|
|
1.3
|
%
|
|
49,979
|
|
|
2.2
|
%
|
||||
2017
|
5,628
|
|
|
1,128
|
|
|
20.0
|
%
|
|
—
|
|
|
0.4
|
%
|
|
29,890
|
|
|
1.4
|
%
|
||||
Subtotal
|
30,146
|
|
|
17,273
|
|
|
57.3
|
%
|
|
—
|
|
|
6.5
|
%
|
|
180,879
|
|
|
2.6
|
%
|
||||
Total
|
$
|
442,996
|
|
|
$
|
264,024
|
|
|
59.6
|
%
|
|
$
|
19,564
|
|
|
100.0
|
%
|
|
$
|
2,728,811
|
|
|
2.8
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”).
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Three Months Ended September 30, 2016
|
|
As of
September 30, 2016 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
38,164
|
|
|
$
|
36,528
|
|
|
95.7
|
%
|
|
$
|
1,674
|
|
|
14.6
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
580
|
|
|
173
|
|
|
29.8
|
%
|
|
166
|
|
|
0.1
|
%
|
|
942
|
|
|
4.6
|
%
|
||||
2008
|
1,648
|
|
|
704
|
|
|
42.7
|
%
|
|
724
|
|
|
0.3
|
%
|
|
3,631
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
2,397
|
|
|
1,760
|
|
|
73.4
|
%
|
|
—
|
|
|
0.7
|
%
|
|
1,902
|
|
|
25.0
|
%
|
||||
2011
|
9,503
|
|
|
6,041
|
|
|
63.6
|
%
|
|
—
|
|
|
2.4
|
%
|
|
9,237
|
|
|
16.1
|
%
|
||||
2012
|
25,960
|
|
|
16,973
|
|
|
65.4
|
%
|
|
—
|
|
|
6.8
|
%
|
|
46,288
|
|
|
11.0
|
%
|
||||
2013
|
43,940
|
|
|
29,954
|
|
|
68.2
|
%
|
|
—
|
|
|
11.9
|
%
|
|
102,270
|
|
|
8.9
|
%
|
||||
2014
|
48,860
|
|
|
26,392
|
|
|
54.0
|
%
|
|
—
|
|
|
10.5
|
%
|
|
205,503
|
|
|
4.0
|
%
|
||||
2015
|
51,548
|
|
|
24,811
|
|
|
48.1
|
%
|
|
—
|
|
|
9.8
|
%
|
|
341,126
|
|
|
2.3
|
%
|
||||
2016
|
33,013
|
|
|
19,996
|
|
|
60.6
|
%
|
|
—
|
|
|
8.0
|
%
|
|
384,603
|
|
|
2.2
|
%
|
||||
Subtotal
|
255,613
|
|
|
163,332
|
|
|
63.9
|
%
|
|
2,564
|
|
|
65.1
|
%
|
|
1,095,502
|
|
|
3.7
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
39,624
|
|
|
26,925
|
|
|
68.0
|
%
|
|
(76,018
|
)
|
|
10.7
|
%
|
|
286,472
|
|
|
3.0
|
%
|
||||
2014
|
37,038
|
|
|
21,869
|
|
|
59.0
|
%
|
|
(13,150
|
)
|
|
8.7
|
%
|
|
341,855
|
|
|
2.1
|
%
|
||||
2015
|
31,236
|
|
|
14,886
|
|
|
47.7
|
%
|
|
(4,843
|
)
|
|
5.9
|
%
|
|
289,982
|
|
|
1.6
|
%
|
||||
2016
|
13,640
|
|
|
7,933
|
|
|
58.2
|
%
|
|
—
|
|
|
3.2
|
%
|
|
206,978
|
|
|
1.5
|
%
|
||||
Subtotal
|
121,538
|
|
|
71,613
|
|
|
58.9
|
%
|
|
(94,011
|
)
|
|
28.5
|
%
|
|
1,125,287
|
|
|
2.1
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
1,770
|
|
|
1,789
|
|
|
101.1
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
410
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,408
|
|
|
0.0
|
%
|
||||
2014
|
4,034
|
|
|
4,349
|
|
|
107.8
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,055
|
|
|
2.2
|
%
|
||||
2015
|
14,203
|
|
|
6,683
|
|
|
47.1
|
%
|
|
—
|
|
|
2.7
|
%
|
|
61,125
|
|
|
3.3
|
%
|
||||
2016
|
9,393
|
|
|
3,215
|
|
|
34.2
|
%
|
|
—
|
|
|
1.3
|
%
|
|
53,454
|
|
|
2.1
|
%
|
||||
Subtotal
|
29,810
|
|
|
16,036
|
|
|
53.8
|
%
|
|
—
|
|
|
6.4
|
%
|
|
177,042
|
|
|
2.7
|
%
|
||||
Total
|
$
|
406,961
|
|
|
$
|
250,981
|
|
|
61.7
|
%
|
|
$
|
(91,447
|
)
|
|
100.0
|
%
|
|
$
|
2,397,831
|
|
|
2.9
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”).
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Nine Months Ended September 30, 2017
|
|
As of
September 30, 2017 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
107,606
|
|
|
$
|
102,900
|
|
|
95.6
|
%
|
|
$
|
4,974
|
|
|
13.2
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
1,556
|
|
|
210
|
|
|
13.5
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2008
|
3,645
|
|
|
1,589
|
|
|
43.6
|
%
|
|
613
|
|
|
0.2
|
%
|
|
2,187
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
1,106
|
|
|
299
|
|
|
27.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2011
|
15,956
|
|
|
13,218
|
|
|
82.8
|
%
|
|
—
|
|
|
1.7
|
%
|
|
5,119
|
|
|
25.0
|
%
|
||||
2012
|
60,098
|
|
|
41,658
|
|
|
69.3
|
%
|
|
(2,337
|
)
|
|
5.4
|
%
|
|
18,042
|
|
|
18.5
|
%
|
||||
2013
|
110,290
|
|
|
73,017
|
|
|
66.2
|
%
|
|
—
|
|
|
9.4
|
%
|
|
53,250
|
|
|
12.7
|
%
|
||||
2014
|
114,944
|
|
|
61,117
|
|
|
53.2
|
%
|
|
(7,844
|
)
|
|
7.9
|
%
|
|
125,059
|
|
|
4.4
|
%
|
||||
2015
|
149,190
|
|
|
60,677
|
|
|
40.7
|
%
|
|
—
|
|
|
7.8
|
%
|
|
222,897
|
|
|
2.6
|
%
|
||||
2016
|
219,608
|
|
|
108,692
|
|
|
49.5
|
%
|
|
—
|
|
|
14.0
|
%
|
|
402,542
|
|
|
2.6
|
%
|
||||
2017
|
58,849
|
|
|
39,893
|
|
|
67.8
|
%
|
|
—
|
|
|
5.1
|
%
|
|
346,524
|
|
|
2.8
|
%
|
||||
Subtotal
|
842,848
|
|
|
503,270
|
|
|
59.7
|
%
|
|
(4,594
|
)
|
|
64.7
|
%
|
|
1,175,620
|
|
|
3.6
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
112,648
|
|
|
71,340
|
|
|
63.3
|
%
|
|
34,128
|
|
|
9.3
|
%
|
|
269,158
|
|
|
3.1
|
%
|
||||
2014
|
104,839
|
|
|
61,622
|
|
|
58.8
|
%
|
|
1,673
|
|
|
7.9
|
%
|
|
294,938
|
|
|
2.4
|
%
|
||||
2015
|
79,373
|
|
|
39,797
|
|
|
50.1
|
%
|
|
—
|
|
|
5.1
|
%
|
|
240,126
|
|
|
1.9
|
%
|
||||
2016
|
72,053
|
|
|
33,452
|
|
|
46.4
|
%
|
|
—
|
|
|
4.3
|
%
|
|
215,499
|
|
|
1.9
|
%
|
||||
2017
|
33,675
|
|
|
17,398
|
|
|
51.7
|
%
|
|
—
|
|
|
2.2
|
%
|
|
352,591
|
|
|
1.7
|
%
|
||||
Subtotal
|
402,588
|
|
|
223,609
|
|
|
55.5
|
%
|
|
35,801
|
|
|
28.8
|
%
|
|
1,372,312
|
|
|
2.2
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
8,544
|
|
|
8,530
|
|
|
99.8
|
%
|
|
—
|
|
|
1.1
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
721
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
308
|
|
|
0.0
|
%
|
||||
2014
|
6,265
|
|
|
12,406
|
|
|
198.0
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,215
|
|
|
2.4
|
%
|
||||
2015
|
32,093
|
|
|
16,555
|
|
|
51.6
|
%
|
|
—
|
|
|
2.1
|
%
|
|
39,487
|
|
|
4.3
|
%
|
||||
2016
|
27,715
|
|
|
11,032
|
|
|
39.8
|
%
|
|
(682
|
)
|
|
1.4
|
%
|
|
49,979
|
|
|
2.2
|
%
|
||||
2017
|
9,267
|
|
|
1,867
|
|
|
20.1
|
%
|
|
—
|
|
|
0.2
|
%
|
|
29,890
|
|
|
1.4
|
%
|
||||
Subtotal
|
84,605
|
|
|
50,390
|
|
|
59.6
|
%
|
|
(682
|
)
|
|
6.5
|
%
|
|
180,879
|
|
|
2.6
|
%
|
||||
Total
|
$
|
1,330,041
|
|
|
$
|
777,269
|
|
|
58.4
|
%
|
|
$
|
30,525
|
|
|
100.0
|
%
|
|
$
|
2,728,811
|
|
|
2.8
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”).
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Nine Months Ended September 30, 2016
|
|
As of September 30, 2016
|
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
99,821
|
|
|
$
|
94,795
|
|
|
95.0
|
%
|
|
$
|
5,171
|
|
|
12.1
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
1,712
|
|
|
587
|
|
|
34.3
|
%
|
|
467
|
|
|
0.1
|
%
|
|
942
|
|
|
4.6
|
%
|
||||
2008
|
7,426
|
|
|
3,663
|
|
|
49.3
|
%
|
|
1,596
|
|
|
0.5
|
%
|
|
3,631
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
8,085
|
|
|
6,270
|
|
|
77.6
|
%
|
|
—
|
|
|
0.8
|
%
|
|
1,902
|
|
|
25.0
|
%
|
||||
2011
|
48,941
|
|
|
30,959
|
|
|
63.3
|
%
|
|
—
|
|
|
4.0
|
%
|
|
9,237
|
|
|
16.1
|
%
|
||||
2012
|
90,568
|
|
|
57,582
|
|
|
63.6
|
%
|
|
—
|
|
|
7.3
|
%
|
|
46,288
|
|
|
11.0
|
%
|
||||
2013
|
158,446
|
|
|
99,614
|
|
|
62.9
|
%
|
|
—
|
|
|
12.7
|
%
|
|
102,270
|
|
|
8.9
|
%
|
||||
2014
|
173,348
|
|
|
87,854
|
|
|
50.7
|
%
|
|
—
|
|
|
11.2
|
%
|
|
205,503
|
|
|
4.0
|
%
|
||||
2015
|
180,200
|
|
|
79,315
|
|
|
44.0
|
%
|
|
—
|
|
|
10.1
|
%
|
|
341,126
|
|
|
2.3
|
%
|
||||
2016
|
63,065
|
|
|
34,720
|
|
|
55.1
|
%
|
|
—
|
|
|
4.4
|
%
|
|
384,603
|
|
|
2.2
|
%
|
||||
Subtotal
|
831,612
|
|
|
495,359
|
|
|
59.6
|
%
|
|
7,234
|
|
|
63.2
|
%
|
|
1,095,502
|
|
|
3.7
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
130,082
|
|
|
103,342
|
|
|
79.4
|
%
|
|
(76,018
|
)
|
|
13.2
|
%
|
|
286,472
|
|
|
3.0
|
%
|
||||
2014
|
121,938
|
|
|
73,747
|
|
|
60.5
|
%
|
|
(13,150
|
)
|
|
9.4
|
%
|
|
341,855
|
|
|
2.1
|
%
|
||||
2015
|
96,926
|
|
|
49,540
|
|
|
51.1
|
%
|
|
(4,843
|
)
|
|
6.3
|
%
|
|
289,982
|
|
|
1.6
|
%
|
||||
2016
|
27,076
|
|
|
15,420
|
|
|
57.0
|
%
|
|
—
|
|
|
2.0
|
%
|
|
206,978
|
|
|
1.5
|
%
|
||||
Subtotal
|
376,022
|
|
|
242,049
|
|
|
64.4
|
%
|
|
(94,011
|
)
|
|
30.9
|
%
|
|
1,125,287
|
|
|
2.1
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
5,436
|
|
|
5,309
|
|
|
97.7
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
1,204
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,408
|
|
|
0.0
|
%
|
||||
2014
|
13,398
|
|
|
13,551
|
|
|
101.1
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,055
|
|
|
2.2
|
%
|
||||
2015
|
44,290
|
|
|
21,512
|
|
|
48.6
|
%
|
|
—
|
|
|
2.7
|
%
|
|
61,125
|
|
|
3.3
|
%
|
||||
2016
|
16,904
|
|
|
6,077
|
|
|
36.0
|
%
|
|
—
|
|
|
0.8
|
%
|
|
53,454
|
|
|
2.1
|
%
|
||||
Subtotal
|
81,232
|
|
|
46,449
|
|
|
57.2
|
%
|
|
—
|
|
|
5.9
|
%
|
|
177,042
|
|
|
2.7
|
%
|
||||
Total
|
$
|
1,288,866
|
|
|
$
|
783,857
|
|
|
60.8
|
%
|
|
$
|
(86,777
|
)
|
|
100.0
|
%
|
|
$
|
2,397,831
|
|
|
2.9
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of Put-Backs.
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Three Months Ended September 30,
|
||||||||||
|
2017
|
|
2016
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
40,613
|
|
|
$
|
39,494
|
|
|
$
|
1,119
|
|
Interest expense on preferred equity certificates
|
6,626
|
|
|
5,903
|
|
|
723
|
|
|||
Amortization of loan fees and other loan costs
|
3,682
|
|
|
3,157
|
|
|
525
|
|
|||
Amortization of debt discount
|
2,592
|
|
|
2,620
|
|
|
(28
|
)
|
|||
Accretion of debt premium
|
(758
|
)
|
|
(2,542
|
)
|
|
1,784
|
|
|||
Total interest expense
|
$
|
52,755
|
|
|
$
|
48,632
|
|
|
$
|
4,123
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
2017
|
|
2016
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
117,785
|
|
|
$
|
122,004
|
|
|
$
|
(4,219
|
)
|
Interest expense on preferred equity certificates
|
19,177
|
|
|
18,684
|
|
|
493
|
|
|||
Amortization of loan fees and other loan costs
|
10,643
|
|
|
9,217
|
|
|
1,426
|
|
|||
Amortization of debt discount
|
7,719
|
|
|
7,869
|
|
|
(150
|
)
|
|||
Accretion of debt premium
|
(2,855
|
)
|
|
(7,854
|
)
|
|
4,999
|
|
|||
Total interest expense
|
$
|
152,469
|
|
|
$
|
149,920
|
|
|
$
|
2,549
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Federal provision
|
35.0
|
%
|
|
(35.0
|
)%
|
|
35.0
|
%
|
|
35.0
|
%
|
State provision (benefit)
|
3.3
|
%
|
|
(2.2
|
)%
|
|
3.3
|
%
|
|
2.2
|
%
|
International (benefit) provision
(1)
|
(7.9
|
)%
|
|
16.0
|
%
|
|
(2.2
|
)%
|
|
19.3
|
%
|
Permanent items
|
(0.7
|
)%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
3.3
|
%
|
Other
(2)
|
0.0
|
%
|
|
(0.1
|
)%
|
|
0.0
|
%
|
|
(6.7
|
)%
|
Effective rate
|
29.7
|
%
|
|
(21.0
|
)%
|
|
36.3
|
%
|
|
53.1
|
%
|
(1)
|
Relates primarily to lower tax rates on income or loss attributable to international operations. Effective January 1, 2017, there was a change to U.K. tax law that resulted in an unfavorable deductibility on interest expenses as compared to the prior period.
|
(2)
|
Includes the effect of discrete items.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
United States
|
42.9
|
%
|
|
41.0
|
%
|
|
42.6
|
%
|
|
39.7
|
%
|
Europe
|
28.4
|
%
|
|
40.3
|
%
|
|
28.9
|
%
|
|
35.0
|
%
|
Other geographies
|
45.9
|
%
|
|
44.1
|
%
|
|
48.3
|
%
|
|
42.5
|
%
|
Overall cost per dollar collected
|
38.4
|
%
|
|
41.1
|
%
|
|
38.8
|
%
|
|
38.5
|
%
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
||||||||||||
GAAP net income (loss) attributable to Encore, as reported
|
$
|
28,194
|
|
|
$
|
1.05
|
|
|
$
|
1.07
|
|
|
$
|
(1,524
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
3,135
|
|
|
0.12
|
|
|
0.12
|
|
|
2,983
|
|
|
0.12
|
|
|
0.12
|
|
||||||
Acquisition, integration and restructuring related expenses
(1)
|
342
|
|
|
0.01
|
|
|
0.01
|
|
|
3,843
|
|
|
0.15
|
|
|
0.15
|
|
||||||
Settlement fees and related administrative expenses
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,613
|
|
|
0.10
|
|
|
0.10
|
|
||||||
Amortization of certain acquired intangible assets
(3)
|
803
|
|
|
0.03
|
|
|
0.03
|
|
|
529
|
|
|
0.02
|
|
|
0.02
|
|
||||||
Income tax effect of the adjustments
(4)
|
(1,321
|
)
|
|
(0.04
|
)
|
|
(0.04
|
)
|
|
(3,263
|
)
|
|
(0.13
|
)
|
|
(0.13
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(5)
|
(461
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
(1,568
|
)
|
|
(0.06
|
)
|
|
(0.06
|
)
|
||||||
Adjusted income attributable to Encore
|
$
|
30,692
|
|
|
$
|
1.15
|
|
|
$
|
1.17
|
|
|
$
|
3,613
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
(1)
|
Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(2)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the three months ended
September 30,
2016, amount consists of settlement and administrative fees related to certain TCPA settlements. We believe these fees and expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(3)
|
As we continue to acquire debt solution service providers around the world, the acquired intangible assets, such as trade names and customer relationships, have grown substantially. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income from continuing operations attributable to Encore and adjusted income from continuing operations per share.
|
(4)
|
Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred.
|
(5)
|
Certain of the above pre-tax adjustments include expenses recognized by our partially-owned subsidiaries. This adjustment represents the portion of the non-GAAP adjustments that are attributable to noncontrolling interest.
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
$
|
|
Per Diluted
Share—
Accounting
|
|
Per Diluted
Share—
Economic
|
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
||||||||||||
GAAP net income from continuing operations attributable to Encore, as reported
|
$
|
70,746
|
|
|
$
|
2.68
|
|
|
$
|
2.70
|
|
|
$
|
56,940
|
|
|
$
|
2.20
|
|
|
$
|
2.20
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
9,227
|
|
|
0.35
|
|
|
0.35
|
|
|
8,813
|
|
|
0.34
|
|
|
0.34
|
|
||||||
Acquisition, integration and restructuring related expenses
(1)
|
4,717
|
|
|
0.18
|
|
|
0.18
|
|
|
10,173
|
|
|
0.39
|
|
|
0.39
|
|
||||||
Gain on reversal of contingent consideration
(2)
|
(2,773
|
)
|
|
(0.10
|
)
|
|
(0.10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Settlement fees and related administrative expenses
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
6,299
|
|
|
0.24
|
|
|
0.24
|
|
||||||
Amortization of certain acquired intangible assets
(4)
|
1,951
|
|
|
0.07
|
|
|
0.07
|
|
|
2,178
|
|
|
0.08
|
|
|
0.08
|
|
||||||
Income tax effect of the adjustments
(5)
|
(3,753
|
)
|
|
(0.14
|
)
|
|
(0.14
|
)
|
|
(8,884
|
)
|
|
(0.34
|
)
|
|
(0.34
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(6)
|
(1,755
|
)
|
|
(0.07
|
)
|
|
(0.07
|
)
|
|
(4,059
|
)
|
|
(0.15
|
)
|
|
(0.15
|
)
|
||||||
Adjusted income from continuing operations attributable to Encore
|
$
|
78,360
|
|
|
$
|
2.97
|
|
|
$
|
2.99
|
|
|
$
|
71,460
|
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
(1)
|
Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(2)
|
Amount represents a gain recognized as a result of reversing a liability for contingent consideration that was established when we acquired a debt solution service provider in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations. Refer to Note 4, “Fair Value Measurement - Contingent Consideration,” in the notes to our consolidated financial statements for further details.
|
(3)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the
nine months ended
September 30,
2016 amount consists of settlement and administrative fees related to certain TCPA settlements. We believe these fees and expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(4)
|
As we continue to acquire debt solution service providers around the world, the acquired intangible assets, such as trade names and customer relationships, have grown substantially. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income from continuing operations attributable to Encore and adjusted income from continuing operations per share.
|
(5)
|
Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred.
|
(6)
|
Certain of the above pre-tax adjustments include expenses recognized by our partially-owned subsidiaries. This adjustment represents the portion of the non-GAAP adjustments that are attributable to noncontrolling interest.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
GAAP net income (loss), as reported
|
$
|
42,144
|
|
|
$
|
(51,946
|
)
|
|
$
|
76,199
|
|
|
$
|
5,494
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
199
|
|
|
3,182
|
|
||||
Interest expense
|
52,755
|
|
|
48,632
|
|
|
152,469
|
|
|
149,920
|
|
||||
Interest income
(1)
|
(943
|
)
|
|
(694
|
)
|
|
(2,641
|
)
|
|
(1,813
|
)
|
||||
Provision (benefit) for income taxes
|
17,844
|
|
|
(13,768
|
)
|
|
43,442
|
|
|
9,831
|
|
||||
Depreciation and amortization
|
8,522
|
|
|
8,032
|
|
|
25,819
|
|
|
26,128
|
|
||||
Stock-based compensation expense
|
3,531
|
|
|
633
|
|
|
7,041
|
|
|
9,502
|
|
||||
Acquisition, integration and restructuring related expenses
(2)
|
342
|
|
|
3,843
|
|
|
4,717
|
|
|
9,255
|
|
||||
Gain on reversal of contingent consideration
(3)
|
—
|
|
|
—
|
|
|
(2,773
|
)
|
|
—
|
|
||||
Settlement fees and related administrative expenses
(4)
|
—
|
|
|
2,613
|
|
|
—
|
|
|
6,299
|
|
||||
Adjusted EBITDA
|
$
|
124,195
|
|
|
$
|
(2,655
|
)
|
|
$
|
304,472
|
|
|
$
|
217,798
|
|
|
|
|
|
|
|
|
|
||||||||
Collections applied to principal balance
(5)
|
$
|
159,408
|
|
|
$
|
247,427
|
|
|
$
|
522,247
|
|
|
$
|
591,786
|
|
(1)
|
In the fourth quarter of 2016, we made a change to our presentation of adjusted EBITDA to adjust for interest income. In previous years we did not include interest income as an adjustment because it was immaterial. We have updated prior periods for comparability.
|
(2)
|
Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(3)
|
Amount represents a gain recognized as a result of reversing a liability for contingent consideration that was established when we acquired a debt solution service provider in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations. Refer to Note
4
, “Fair Value Measurement - Contingent Consideration,” in the notes to our consolidated financial statements for further details.
|
(4)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the
three and nine months ended
September 30,
2016, amount consists of settlement and administrative fees related to certain TCPA settlements. We believe these fees and expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(5)
|
Collections applied to principal balance represents (a) gross collections from receivable portfolios less (b) revenue from receivable portfolios, net.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
GAAP total operating expenses, as reported
|
$
|
202,829
|
|
|
$
|
200,597
|
|
|
$
|
609,252
|
|
|
$
|
603,805
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
(3,531
|
)
|
|
(633
|
)
|
|
(7,041
|
)
|
|
(9,502
|
)
|
||||
Operating expenses related to non-portfolio purchasing and recovery business
(1)
|
(28,934
|
)
|
|
(26,446
|
)
|
|
(83,864
|
)
|
|
(81,584
|
)
|
||||
Acquisition, integration and restructuring related expenses
(2)
|
(342
|
)
|
|
(3,843
|
)
|
|
(4,717
|
)
|
|
(10,173
|
)
|
||||
Gain on reversal of contingent consideration
(3)
|
—
|
|
|
—
|
|
|
2,773
|
|
|
—
|
|
||||
Settlement fees and related administrative expenses
(4)
|
—
|
|
|
(2,613
|
)
|
|
—
|
|
|
(6,299
|
)
|
||||
Adjusted operating expenses related to portfolio purchasing and recovery business
|
$
|
170,022
|
|
|
$
|
167,062
|
|
|
$
|
516,403
|
|
|
$
|
496,247
|
|
(1)
|
Operating expenses related to non-portfolio purchasing and recovery business include operating expenses from other operating segments that primarily engage in fee-based business, as well as corporate overhead not related to our portfolio purchasing and recovery business.
|
(2)
|
Amount represents acquisition, integration and restructuring related operating expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(3)
|
Amount represents a gain recognized as a result of reversing a liability for contingent consideration that was established when we acquired a debt solution service provider in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations. Refer to Note
4
, “Fair Value Measurement - Contingent Consideration,” in the notes to our consolidated financial statements for further details.
|
(4)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the
three and nine months ended
September 30,
2016, amount consists of settlement and administrative fees related to certain TCPA settlements. We believe these fees and expenses are not indicative of ongoing operations; therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
|
(1)
|
Adjusted for Put-Backs and Recalls. Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement (“Recalls”).
|
(2)
|
Cumulative collections from inception through
September 30, 2017
, excluding collections on behalf of others.
|
(3)
|
Cumulative Collections Multiple (“CCM”) through
September 30, 2017
refers to collections as a multiple of purchase price.
|
(1)
|
Adjusted for Put-Backs and Recalls.
|
(2)
|
Cumulative collections from inception through
September 30, 2017
, excluding collections on behalf of others.
|
(3)
|
Includes portfolios acquired in connection with certain business combinations.
|
(1)
|
ERC for Zero Basis Portfolios can extend beyond our collection forecasts. As of
September 30, 2017
, ERC for Zero Basis Portfolios include approximately $298.6 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies were immaterial.
|
(2)
|
The collection forecast of each pool is generally estimated up to 120 months in the United States and up to 180 months in Europe. Expected collections beyond the 120 month collection forecast in the United States are included in ERC but are not included in the calculation of IRRs.
|
(3)
|
2017 amount consists of three months data from October 1, 2017 to December 31, 2017.
|
(4)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Unamortized
Balance as of September 30, 2017 |
|
Purchase
Price
(1)
|
|
Unamortized
Balance as a
Percentage of
Purchase Price
|
|
Unamortized
Balance as a
Percentage
of Total
|
||||||
United States:
|
|
|
|
|
|
|
|
||||||
2008
|
$
|
2,187
|
|
|
$
|
227,751
|
|
|
1.0
|
%
|
|
0.2
|
%
|
2009
|
—
|
|
|
252,978
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2010
|
—
|
|
|
357,360
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2011
|
5,119
|
|
|
383,907
|
|
|
1.3
|
%
|
|
0.4
|
%
|
||
2012
|
18,042
|
|
|
548,968
|
|
|
3.3
|
%
|
|
1.5
|
%
|
||
2013
(2)
|
53,250
|
|
|
552,299
|
|
|
9.6
|
%
|
|
4.5
|
%
|
||
2014
(2)
|
125,059
|
|
|
518,899
|
|
|
24.1
|
%
|
|
10.6
|
%
|
||
2015
|
222,897
|
|
|
500,796
|
|
|
44.5
|
%
|
|
19.0
|
%
|
||
2016
|
402,542
|
|
|
556,406
|
|
|
72.3
|
%
|
|
34.3
|
%
|
||
2017
|
346,524
|
|
|
365,504
|
|
|
94.8
|
%
|
|
29.5
|
%
|
||
Subtotal
|
1,175,620
|
|
|
4,264,868
|
|
|
27.6
|
%
|
|
100.0
|
%
|
||
Europe:
|
|
|
|
|
|
|
|
||||||
2013
(2)
|
269,158
|
|
|
619,079
|
|
|
43.5
|
%
|
|
19.6
|
%
|
||
2014
(2)
|
294,938
|
|
|
630,342
|
|
|
46.8
|
%
|
|
21.5
|
%
|
||
2015
(2)
|
240,126
|
|
|
423,331
|
|
|
56.7
|
%
|
|
17.5
|
%
|
||
2016
|
215,499
|
|
|
258,872
|
|
|
83.2
|
%
|
|
15.7
|
%
|
||
2017
|
352,591
|
|
|
354,623
|
|
|
99.4
|
%
|
|
25.7
|
%
|
||
Subtotal
|
1,372,312
|
|
|
2,286,247
|
|
|
60.0
|
%
|
|
100.0
|
%
|
||
Other geographies:
|
|
|
|
|
|
|
|
||||||
2013
|
308
|
|
|
29,568
|
|
|
1.0
|
%
|
|
0.2
|
%
|
||
2014
|
61,215
|
|
|
86,989
|
|
|
70.4
|
%
|
|
33.8
|
%
|
||
2015
(2)
|
39,487
|
|
|
91,128
|
|
|
43.3
|
%
|
|
21.8
|
%
|
||
2016
|
49,979
|
|
|
79,815
|
|
|
62.6
|
%
|
|
27.6
|
%
|
||
2017
|
29,890
|
|
|
35,598
|
|
|
84.0
|
%
|
|
16.6
|
%
|
||
Subtotal
|
180,879
|
|
|
323,098
|
|
|
56.0
|
%
|
|
100.0
|
%
|
||
Total
|
$
|
2,728,811
|
|
|
$
|
6,874,213
|
|
|
39.7
|
%
|
|
100.0
|
%
|
(1)
|
Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-Backs, Recalls, and other adjustments.
|
(2)
|
Includes portfolios acquired in connection with certain business combinations.
|
Years Ending December 31,
|
United States
|
|
Europe
|
|
Other Geographies
|
|
Total
Amortization
|
||||||||
2017
(1)
|
$
|
68,506
|
|
|
$
|
30,228
|
|
|
$
|
3,062
|
|
|
$
|
101,796
|
|
2018
|
314,086
|
|
|
133,082
|
|
|
16,812
|
|
|
463,980
|
|
||||
2019
|
294,496
|
|
|
179,493
|
|
|
44,755
|
|
|
518,744
|
|
||||
2020
|
188,087
|
|
|
152,236
|
|
|
51,398
|
|
|
391,721
|
|
||||
2021
|
123,396
|
|
|
130,653
|
|
|
35,421
|
|
|
289,470
|
|
||||
2022
|
77,596
|
|
|
114,055
|
|
|
11,877
|
|
|
203,528
|
|
||||
2023
|
49,095
|
|
|
101,021
|
|
|
6,467
|
|
|
156,583
|
|
||||
2024
|
30,402
|
|
|
89,393
|
|
|
4,649
|
|
|
124,444
|
|
||||
2025
|
18,168
|
|
|
82,813
|
|
|
3,987
|
|
|
104,968
|
|
||||
2026
|
9,704
|
|
|
90,345
|
|
|
2,237
|
|
|
102,286
|
|
||||
2027
|
2,084
|
|
|
85,420
|
|
|
214
|
|
|
87,718
|
|
||||
2028
|
—
|
|
|
85,061
|
|
|
—
|
|
|
85,061
|
|
||||
2029
|
—
|
|
|
44,204
|
|
|
—
|
|
|
44,204
|
|
||||
2030
|
—
|
|
|
29,823
|
|
|
—
|
|
|
29,823
|
|
||||
2031
|
—
|
|
|
20,329
|
|
|
—
|
|
|
20,329
|
|
||||
2032
|
—
|
|
|
4,156
|
|
|
—
|
|
|
4,156
|
|
||||
Total
|
$
|
1,175,620
|
|
|
$
|
1,372,312
|
|
|
$
|
180,879
|
|
|
$
|
2,728,811
|
|
(1)
|
2017 amount consists of three months data from October 1, 2017 to December 31, 2017.
|
|
Headcount as of September 30,
|
||||||||||
|
2017
|
|
2016
|
||||||||
|
Domestic
|
|
International
|
|
Domestic
|
|
International
|
||||
General & Administrative
|
883
|
|
|
2,286
|
|
|
915
|
|
|
2,152
|
|
Account Manager
|
344
|
|
|
3,572
|
|
|
266
|
|
|
3,229
|
|
Total
|
1,227
|
|
|
5,858
|
|
|
1,181
|
|
|
5,381
|
|
Quarter
|
# of
Accounts
|
|
Face Value
|
|
Purchase
Price
|
|||||
Q1 2015
|
734
|
|
|
$
|
1,041,011
|
|
|
$
|
125,154
|
|
Q2 2015(1)
|
2,970
|
|
|
5,544,885
|
|
|
418,780
|
|
||
Q3 2015
|
1,267
|
|
|
2,085,381
|
|
|
187,180
|
|
||
Q4 2015(1)
|
2,363
|
|
|
4,068,252
|
|
|
292,608
|
|
||
Q1 2016
|
1,450
|
|
|
3,544,338
|
|
|
256,753
|
|
||
Q2 2016
|
946
|
|
|
2,841,527
|
|
|
233,116
|
|
||
Q3 2016
|
874
|
|
|
1,475,381
|
|
|
206,359
|
|
||
Q4 2016
|
1,159
|
|
|
1,943,775
|
|
|
210,491
|
|
||
Q1 2017
|
807
|
|
|
1,657,393
|
|
|
218,727
|
|
||
Q2 2017
|
1,347
|
|
|
2,441,909
|
|
|
246,415
|
|
||
Q3 2017
|
1,010
|
|
|
3,018,072
|
|
|
292,332
|
|
(1)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(Unaudited)
|
||||||
Net cash provided by operating activities
|
$
|
81,691
|
|
|
$
|
85,268
|
|
Net cash used in investing activities
|
(207,780
|
)
|
|
(91,613
|
)
|
||
Net cash provided by financing activities
|
155,309
|
|
|
13,687
|
|
Number
|
|
Description
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document (filed herewith)
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document (filed herewith)
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
|
|
ENCORE CAPITAL GROUP, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Jonathan C. Clark
|
|
|
|
Jonathan C. Clark
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer and Treasurer
|
Very truly yours,
|
|
DNB Capital, LLC, a New York limited liability company
|
|
By:
/s/ Philip F. Kurpiewski
|
Name:
Philip F. Kurpiewski
|
Title:
Senior Vice President
|
|
By:
/s/ Rune Nilsen, Jr.
|
Name:
Rune Nilsen, Jr.
|
Title:
Senior Vice President
|
|
|
Lender
|
Aggregate Amount of Term Loan A-2 of Existing Lender Converted to Term Loan A-3 on the Closing Date
|
Additional Term Loan A-3 Commitment of Increasing Lenders as of the Closing Date
|
Incremental or Extended Term Loan A-3 made or Extended after the Closing Date
|
Total Term Loan A-3 as of the Agreement Effective Date
1
|
||||||||
SunTrust Bank
|
|
$12,690,361.06
|
|
|
$2,331,019.21
|
|
|
|
$14,645,845.77
|
|
||
Bank of America
|
13,469,866.33
|
|
1,551,513.94
|
|
|
14,645,845.77
|
|
|||||
ING Capital
|
7,533,482.17
|
|
142,787.76
|
|
|
7,484,363.19
|
|
|||||
MUFG Union Bank, NA
|
2,260,044.66
|
|
2,337,004.18
|
|
|
4,482,122.62
|
|
|||||
Citibank, NA
|
5,273,437.52
|
|
|
|
5,141,601.58
|
|
||||||
California Bank and Trust
|
6,428,571.75
|
|
|
|
6,267,857.45
|
|
||||||
Flagstar Bank
|
|
25,000,000.00
|
|
|
24,375,000.00
|
|
||||||
Bank Leumi USA
|
3,570,870.47
|
|
661,272.39
|
|
|
4,126,339.26
|
|
|||||
Northwest Bank
|
4,656,250.00
|
|
343,750.00
|
|
|
4,875,000.00
|
|
|||||
Umpqua Bank
|
|
|
2,578,124.98
|
|
2,513,671.86
|
|
||||||
Cathay Bank
|
|
|
1,752,232.15
|
|
1,708,426.35
|
|
||||||
Woodforest National Bank
|
|
|
5,000,000.00
|
|
4,875,000.00
|
|
||||||
DNB Capital
, LLC
|
|
|
25,000,000.00
|
|
25,000,000.00
|
|
||||||
Total
|
|
$55,882,883.96
|
|
|
$32,367,347.48
|
|
|
$34,330,357.13
|
|
$
|
120,141,073.85
|
|
Lender
|
Term Loan A as of the Agreement Effective Date
1
|
Term Loan A-2 as of the Agreement Effective Date
1
|
||||
Fifth Third Bank
|
|
|
$6,920,602.37
|
|
||
Raymond James Bank, N.A.
|
|
7,265,625.00
|
|
|||
Chang Hwa
|
|
1,383,928.58
|
|
|||
Israel Discount Bank
|
|
$2,544,642.85
|
|
|
||
Amalgamated Bank
|
1,908,482.12
|
|
|
|||
Manufacturers Bank
|
________________
|
|
1,383,928.58
|
|
||
Total
|
|
$4,453,124.97
|
|
$
|
16,954,084.53
|
|
Lender
|
Aggregate Amount of Term Loan A-2 of Existing Lender Converted to Term Loan A-3 on the Closing Date
|
Additional Term Loan A-3 Commitment of Increasing Lenders as of the Closing Date
|
Incremental or Extended Term Loan A-3 made or Extended after the Closing Date
|
Total Term Loan A-3 as of the Agreement Effective Date
1
|
||||||||
SunTrust Bank
|
|
$12,690,361.06
|
|
|
$2,331,019.21
|
|
|
|
$14,645,845.77
|
|
||
Bank of America
|
13,469,866.33
|
|
1,551,513.94
|
|
|
14,645,845.77
|
|
|||||
ING Capital
|
7,533,482.17
|
|
142,787.76
|
|
|
7,484,363.19
|
|
|||||
MUFG Union Bank, NA
|
2,260,044.66
|
|
2,337,004.18
|
|
|
4,482,122.62
|
|
|||||
Citibank, NA
|
5,273,437.52
|
|
|
|
5,141,601.58
|
|
||||||
California Bank and Trust
|
6,428,571.75
|
|
|
|
6,267,857.45
|
|
||||||
Flagstar Bank
|
|
25,000,000.00
|
|
|
24,375,000.00
|
|
||||||
Bank Leumi USA
|
3,570,870.47
|
|
661,272.39
|
|
|
4,126,339.26
|
|
|||||
Northwest Bank
|
4,656,250.00
|
|
343,750.00
|
|
|
4,875,000.00
|
|
|||||
Umpqua Bank
|
|
|
2,578,124.98
|
|
2,513,671.86
|
|
||||||
Cathay Bank
|
|
|
1,752,232.15
|
|
1,708,426.35
|
|
||||||
Woodforest National Bank
|
|
|
5,000,000.00
|
|
4,875,000.00
|
|
||||||
DNB Capital, LLC
|
|
|
25,000,000.00
|
|
25,000,000.00
|
|
||||||
Regions Bank
|
|
|
50,000,000.00
|
|
50,000,000.00
|
|
||||||
Total
|
|
$55,882,883.96
|
|
|
$32,367,347.48
|
|
|
$84,330,357.13
|
|
$
|
170,141,073.85
|
|
Lender
|
Term Loan A as of the Agreement Effective Date
1
|
Term Loan A-2 as of the Agreement Effective Date
1
|
||||
Fifth Third Bank
|
|
|
$6,920,602.37
|
|
||
Raymond James Bank, N.A.
|
|
7,265,625.00
|
|
|||
Chang Hwa
|
|
1,383,928.58
|
|
|||
Israel Discount Bank
|
|
$2,544,642.85
|
|
|
||
Amalgamated Bank
|
1,908,482.12
|
|
|
|||
Manufacturers Bank
|
________________
|
|
1,383,928.58
|
|
||
Total
|
|
$4,453,124.97
|
|
|
$16,954,084.53
|
|
Lender
|
Revolving Commitment Amount as of the Agreement Effective Date
|
||
UMPQUA BANK
|
|
$41,041,666.67
|
|
Lender
|
Revolving Commitment Amount as of the Agreement Effective Date
|
||
WOODFOREST NATIONAL BANK
|
|
$20,000,000.00
|
|
REGIONS BANK
|
|
$25,000,000.00
|
|
Lender
|
2021 Revolving Commitment Amount as of the Agreement Effective Date
|
||
SunTrust Bank
|
|
$83,278,619.73
|
|
Bank of America
|
83,278,619.73
|
|
|
ING Capital
|
67,323,730.07
|
|
|
Credit Suisse AG Cayman Island
|
50,000,000.00
|
|
|
Union Bank, NA
|
45,402,951.16
|
|
|
Citibank NA
|
43,749,999.98
|
|
|
Morgan Stanley Bank NA
|
40,625,000.00
|
|
|
California Bank and Trust
|
32,380,952.00
|
|
|
Flagstar Bank
|
5,000,000.00
|
|
|
PrivateBank and Trust Co.
|
25,000,000.00
|
|
|
UBS AG
|
20,000,000.00
|
|
|
Bank Leumi
|
10,767,857.14
|
|
|
CTBC Bank Corp
|
10,000,000.00
|
|
|
Opus Bank
|
10,000,000.00
|
|
|
Cathay Bank
|
13,164,285.70
|
|
|
TOTAL (New, Incremental and Extending)
|
|
$626,013,682.18
|
|
Lender
|
Revolving Commitment Amount as of the Agreement Effective Date
|
||
2017 Lenders
|
|
||
Israel Discount Bank
|
|
$16,190,476.19
|
|
Amalgamated Bank
|
15,892,857.14
|
|
|
Total 2017 Lenders
|
|
$32,083,333.33
|
|
2019 Lenders
|
|
||
Fifth Third Bank
|
51,070,190.48
|
|
|
Citizens Bank, NA
|
35,000,000.00
|
|
|
Raymond James Bank, N.A.
|
20,000,000.00
|
|
|
Chang Hwa
|
19,345,238.10
|
|
|
Barclays Bank PLC
|
20,000,000.00
|
|
|
Western Alliance Bank
|
15,000,000.00
|
|
|
Manufacturers Bank
|
8,214,285.70
|
|
|
Total 2019 Lenders
|
|
$168,629,714.28
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
|
/
S
/ A
SHISH
M
ASIH
|
|
|
Ashish Masih
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
|
/
S
/ JONATHAN C. CLARK
|
|
|
Jonathan C. Clark
Executive Vice President, Chief Financial Officer and Treasurer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.
|
|
|
/s/ Ashish Masih
|
|
Ashish Masih
|
|
President and Chief Executive Officer
|
|
|
|
/s/ Jonathan C. Clark
|
|
Jonathan C. Clark
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|
|